UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ X ] Pre-Effective Amendment No. 2 [ ] Post-Effective Amendment No.
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(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter: Area Code and
Telephone Number:
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC. (816) 531-5575
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Address of Principal Executive Offices: (Number, Street, City, State, Zip Code)
4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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Name and Address of Agent for Service: (Number, Street, City, State, Zip Code)
CHARLES A. ETHERINGTON, 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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Approximate Date of Proposed Public Offering: April 16, 2007
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Title of Securities Being Registered:
UTILITIES FUND
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is due because of reliance on Section 24(f).
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROXY STATEMENT/PROSPECTUS
APRIL 13, 2007
IMPORTANT VOTING INFORMATION INSIDE
AMERICAN CENTURY MUNICIPAL TRUST
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.
American Century Investments
4500 Main Street
Kansas City, MO 64111
April 13, 2007
Dear Shareholder,
I would like to invite you to an upcoming special meeting of shareholders
to be held on June 27, 2007 at 11:30 a.m. Depending on the funds you hold, you
are being asked to vote on proposed reorganizations and/or reclassifications. A
brief description is below and more detailed information is contained in the
enclosed materials. The Boards of Directors/Trustees of these funds, including
all of the Independent Directors/Trustees, unanimously approved and recommend
that you vote FOR the proposals.
American Century® recently completed a review of its fund line-up and
share class offerings. As a result, we are proposing:
1) The reorganizations of the Arizona Municipal Bond Fund and the Florida
Municipal Bond Fund into the Tax-Free Bond Fund; and
2) The conversion of the Advisor Class shares of the Tax-Free Bond Fund
and the Utilities Fund to Investor Class shares (sometimes referred to
as reclassifications).
These proposals are part of a larger set of initiatives designed to
streamline American Century's mutual fund offerings and better align them with
investor buying preferences and market opportunities. If these additional
initiatives apply to your fund, they will be presented for your consideration
and approval in a separate set of proxy materials.
Your vote is extremely important, no matter how large or small your
holdings. Please review the enclosed materials and vote online, by phone or by
signing and returning your proxy card(s) in the enclosed postage-paid envelope.
If we do not hear from you after a reasonable time, you may receive a call from
our proxy solicitor, Automatic Data Processing, Inc. (ADP), reminding you to
vote. If you have any questions or need assistance in completing your proxy
card(s), please contact ADP at 1-877-256-6083.
Thank you for investing with American Century Investments.
Sincerely,
Jonathan S. Thomas
President and Chief Executive Officer
American Century Investments
AMERICAN CENTURY FUNDS
ARIZONA MUNICIPAL BOND
FLORIDA MUNICIPAL BOND
TAX-FREE BOND
UTILITIES
IMPORTANT NEWS FOR SHAREHOLDERS
While we encourage you to read all of the proxy materials, you will find a brief
overview of the proposals below. The overview and accompanying Q&A contain
limited information, should be read in conjunction with, and are qualified by
reference to the more detailed information contained elsewhere in the Proxy
Statement/Prospectus.
o Shareholders of Arizona Municipal Bond and Florida Municipal Bond are
being asked to approve the reorganization of each fund into Tax-Free
Bond (referred to as the reorganizations). If approved, this would
result in the tax-free reorganization of those funds into Tax-Free
Bond.
o Shareholders of Tax-Free Bond and Utilities are being asked to approve
a conversion of their Advisor Class shares to Investor Class shares of
the same fund (referred to as the reclassifications).
QUESTIONS AND ANSWERS
Q. WHEN WILL THE SPECIAL MEETING BE HELD? WHO CAN VOTE?
A. The special meeting will be held on Wednesday, June 27, 2007, at 11:30 a.m.
Central time at American Century's office at 4500 Main Street, Kansas City,
Missouri. Please note, this will be a business meeting only. No presentations
about the funds are planned. If you owned shares of one of the impacted funds at
the close of business on April 13, 2007, you are entitled to vote, even if you
later sold the shares. Each shareholder is entitled to one vote per dollar of
shares owned, with fractional dollars voting proportionally.
Q. WHAT ARE THE REORGANIZATIONS?
A. The following table outlines the proposed reorganizations and shows what
Arizona Municipal Bond and Florida Municipal Bond shareholders will receive if
the reorganizations are approved:
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IF YOU OWN SHARES OF: YOU WILL RECEIVE SHARES OF:
- ----------------------------------------- ------------------------------------
Arizona Municipal Bond Tax-Free Bond
Investor Class, A Class, B Class, C Class Investor Class
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Florida Municipal Bond Tax-Free Bond
Investor Class, A Class, B Class, C Class Investor Class
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Q. HOW WILL THE REORGANIZATIONS AFFECT MY INVESTMENTS IN THE FUNDS?
A. If approved, you will receive shares of Tax-Free Bond in exchange for your
shares of Arizona Municipal Bond and Florida Municipal Bond. The
reorganizations:
o WILL NOT BE TAXABLE (See INFORMATION ABOUT THE REORGANIZATIONS -
Federal Income Tax Consequences of the Reorganizations.);
o MAY REDUCE YOUR FUND EXPENSES (The total operating expenses for the
Investor Class shares of Tax-Free Bond to be received in the
reorganizations are lower than those of every class of Arizona
Municipal Bond and Florida Municipal Bond except Investor Class.
Investor Class expenses are the same for each of the funds.); and
o WILL AFFECT YOUR FUND'S INVESTMENT OBJECTIVE (Tax-Free Bond seeks
current income that is exempt from federal income taxes. Arizona
Municipal Bond and Florida Municipal Bond share that objective but
also seek income that is exempt from, respectively, Arizona income
taxes and the Florida intangible personal property tax. However, the
potential state tax benefits of Florida Municipal Bond were eliminated
when Florida repealed the intangible personal property tax effective
January 1, 2007.).
Q. HOW WILL THE REORGANIZATIONS WORK?
A. The reorganizations will involve the following:
o the transfer of all of the assets and certain liabilities of Arizona
Municipal Bond and Florida Municipal Bond to Tax-Free Bond in exchange
for shares of the Investor Class of Tax-Free Bond having equivalent
value to the net assets transferred;
o the pro rata distribution of shares of Tax-Free Bond to the
shareholders of record of Arizona Municipal Bond and Florida Municipal
Bond; and
o the termination of Arizona Municipal Bond and Florida Municipal Bond
following the reorganizations.
The reorganizations would take place on the Closing Date, as defined in the
Proxy Statement/Prospectus.
Q. WILL I HAVE TO PAY ANY SALES CHARGES ON SHARES RECEIVED IN THE
REORGANIZATIONS?
A. No. The Investor Class shares to be received in the reorganizations do not
carry a front-end sales charge (load) or contingent deferred sales charge.
Q. WHAT ARE THE RECLASSIFICATIONS?
A. The following table outlines the proposed reclassifications and shows what
shareholders will receive if the reclassifications are approved:
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IF YOU OWN SHARES OF: YOU WILL RECEIVE SHARES OF:
- --------------------------------------- ----------------------------------------
Tax-Free Bond - Advisor Class Tax-Free Bond - Investor Class
- --------------------------------------- ----------------------------------------
Utilities - Advisor Class Utilities - Investor Class
- --------------------------------------- ----------------------------------------
Q. HOW WILL THE RECLASSIFICATIONS AFFECT MY INVESTMENTS IN THE FUNDS?
A. If approved, your Advisor Class shares will be converted to Investor Class
shares of the same fund, as indicated in the table above. The reclassifications:
o will reduce your fund operating expenses;
o will not be taxable; and
o will not cause you to be invested in a different fund or change the
investment objectives, policies or manager of your funds.
Q. HOW WILL THE RECLASSIFICATIONS WORK?
A. If a reclassification is approved, an amendment to the fund's Articles of
Incorporation/Declaration of Trust will be filed that will have the effect of
converting your Advisor Class shares to Investor Class shares of the same fund,
as indicated in the table above. This change would take place on the Closing
Date, as defined in the Proxy Statement/Prospectus.
Q. WILL I HAVE TO PAY ANY SALES CHARGES ON SHARES RECEIVED IN THE
RECLASSIFICATIONS?
A. No. Investor Class shares do not carry a front-end sales charge (load) or
contingent deferred sales charge.
Q. HOW DOES THE BOARD OF DIRECTORS OR BOARD OF TRUSTEES OF EACH FUND RECOMMEND
THAT I VOTE?
A. The Boards of Directors/Trustees, including all of the Independent
Directors/Trustees, unanimously recommend you vote FOR the reorganizations and
reclassifications. For a discussion of the factors the Board considered in
approving the reorganizations, see "Reasons for the Reorganizations." For a
discussion of the factors the Boards considered in approving the
reclassifications, see "Reasons for the Reclassifications."
Q. MY HOLDINGS IN THE FUNDS ARE SMALL, WHY SHOULD I VOTE?
A. Your vote makes a difference. If many shareholders do not vote their proxies,
your fund may not receive enough votes to go forward with its special meeting.
This means additional costs will be incurred to solicit votes to determine the
outcome of the proposals.
Q. WHAT HAPPENS IF ANY OF THE REORGANIZATIONS OR RECLASSIFICATIONS IS NOT
APPROVED BY SHAREHOLDERS?
A. Each reorganization and reclassification is a separate transaction, and is
not dependent upon the approval of any other reorganization or reclassification.
If a reorganization or reclassification does not receive shareholder approval,
American Century may ask for Board approval to liquidate the affected fund or
class. In addition, if a significant number of reclassification proposals do not
receive shareholder approval, then American Century may elect not to proceed
with any of them.
Q. WHY ARE MULTIPLE PROXY CARDS ENCLOSED?
A. You will receive a proxy card for each of the funds in which you are a
shareholder. In addition, if you own shares of the same fund in multiple
accounts that are titled differently, you will receive a proxy card for each
account.
Q. HOW DO I CAST MY VOTE?
A. You may vote online, by phone, by mail, by fax or in person at the special
meeting. To vote online, access the Web site listed on a proxy card. To vote by
telephone, call the toll-free number listed on a proxy card. To vote online or
by telephone, you will need the number that appears in the gray box on each of
your proxy cards. To vote by mail, complete, sign and send us the enclosed proxy
card(s) in the enclosed postage-paid envelope. To vote by fax, complete and sign
the proxy card(s) and fax both sides to the toll-free number listed on a proxy
card. You also may vote in person at the special meeting on Wednesday, June 27,
2007. If you need more information or have any questions on how to cast your
vote, call our proxy solicitor at 1-877-256-6083.
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY AND AVOID THE NEED FOR ADDITIONAL
SOLICITATION EXPENSES.
AMERICAN CENTURY FUNDS
ARIZONA MUNICIPAL BOND
FLORIDA MUNICIPAL BOND
TAX-FREE BOND
UTILITIES
4500 MAIN STREET
KANSAS CITY, MISSOURI 64111
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 27, 2007
To Our Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Meeting") of
the American Century Funds listed above will be held at 4500 Main Street, Kansas
City, Missouri on June 27, 2007 at 11:30 a.m., Central Time for the following
purposes:
For shareholders of Arizona Municipal Bond:
To approve an agreement and plan of reorganization whereby effective August 31,
2007 or such other date as American Century may decide, Arizona Municipal Bond
will be reorganized into Tax-Free Bond. Both Arizona Municipal Bond and Tax-Free
Bond are series of American Century Municipal Trust.
For shareholders of Florida Municipal Bond:
To approve an agreement and plan of reorganization, whereby effective August 31,
2007 or such other date as American Century may decide, Florida Municipal Bond
will be reorganized into Tax-Free Bond. Both Florida Municipal Bond and Tax-Free
Bond are series of American Century Municipal Trust.
For Advisor Class shareholders of Tax-Free Bond and Utilities:
To approve a reclassification of the Advisor Class shares of Tax-Free Bond, a
series of American Century Municipal Trust, and Utilities, a series of American
Century Quantitative Equity Funds, Inc., whereby, effective November 30, 2007 or
on such other date as American Century may decide, all of the Advisor Class
shares will be reclassified as Investor Class shares of the same funds. As a
result of this reclassification, each holder of Advisor Class shares of the
aforementioned funds will become the owner of Investor Class shares of the same
funds, having a total net asset value ("NAV") equal to the total NAV of his or
her Advisor Class holdings in the applicable funds on the date of the
reclassification.
It is not anticipated that any matters other than the approval of the
reorganizations and reclassifications will be brought before the meeting. If,
however, any other business is properly brought before the Meeting, proxies will
be voted in accordance with the judgment of the persons designated as proxies.
The Boards of Directors/Trustees of the aforementioned funds have fixed the
close of business on April 13, 2007, as the record date for the determination of
shareholders entitled to notice of, and to vote at, the Meeting or any
adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. SHAREHOLDERS ARE REQUESTED AND
ENCOURAGED TO VOTE ONLINE, BY PHONE, OR BY DATING, SIGNING AND RETURNING EACH
ENCLOSED PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED FOR THAT PURPOSE. IF
YOU INTEND TO ATTEND THE MEETING IN PERSON, YOU MAY REGISTER YOUR PRESENCE WITH
THE REGISTRAR AND VOTE YOUR SHARES IN PERSON, EVEN IF YOU HAVE PREVIOUSLY VOTED
YOUR SHARES BY PROXY.
If you properly execute and return the enclosed proxy card(s) in time to be
voted at the Meeting, your shares represented by the proxies will be voted at
the Meeting in accordance with your instructions. Unless revoked, proxies that
have been returned by shareholders without instructions will be voted in favor
of the reorganizations and reclassifications.
The enclosed proxies are being solicited on behalf of the Boards of
Directors/Trustees of the funds.
THE BOARD OF DIRECTORS/TRUSTEES OF EACH OF THE FUNDS UNANIMOUSLY RECOMMENDS THAT
THE SHAREHOLDERS OF THE FUNDS VOTE FOR THE REORGANIZATIONS AND
RECLASSIFICATIONS.
By Order of the Boards of Directors/Trustees of the funds,
Ward D. Stauffer
Secretary
April 13, 2007
COMBINED PROXY STATEMENT AND PROSPECTUS
April 3, 2007
REORGANIZATION OF
AMERICAN CENTURY ARIZONA MUNICIPAL BOND FUND AND
AMERICAN CENTURY FLORIDA MUNICIPAL BOND FUND
EACH, A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST
IN EXCHANGE FOR INVESTOR CLASS SHARES OF
AMERICAN CENTURY TAX-FREE BOND FUND
A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST
AND THE
RECLASSIFICATION OF ADVISOR CLASS SHARES OF THE FOLLOWING FUNDS AS INVESTOR
CLASS SHARES OF THE SAME FUNDS:
AMERICAN CENTURY TAX-FREE BOND FUND
A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST
AND
AMERICAN CENTURY UTILITIES FUND
A SERIES OF AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.
Each Fund has the following address:
4500 Main Street
Kansas City, Missouri 64111
Telephone No.: 1-877-345-8836
This document is a combined Proxy Statement and Prospectus and we refer to it as
the Proxy Statement/Prospectus. We are sending you this Proxy
Statement/Prospectus in connection with the Special Meeting of Shareholders (the
"Meeting") for the following American Century Funds: Arizona Municipal Bond,
Florida Municipal Bond, Tax-Free Bond and Utilities (hereinafter collectively
referred to as the "American Century Funds"). The Meeting will be held at 4500
Main Street, Kansas City, Missouri on June 27, 2007, at 11:30 a.m., Central
Time. We intend to mail this Proxy Statement/Prospectus, the enclosed Notice of
a Special Meeting of Shareholders and the enclosed proxy card(s) on or about
April 16, 2007, to all shareholders entitled to vote at the Meeting.
At the Meeting, we are asking shareholders of the American Century Funds to
consider the following proposals:
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Proposal 1: To approve an agreement and plan of reorganization whereby effective
on or about August 31, 2007, or on such other date as American Century may
decide, the American Century Arizona Municipal Bond Fund ("Arizona Municipal
Bond"), will be reorganized into the American Century Tax-Free Bond Fund
("Tax-Free Bond"). Both Arizona Municipal Bond and Tax-Free Bond are series of
American Century Municipal Trust.
- --------------------------------------------------------------------------------
Proposal 2: To approve an agreement and plan of reorganization whereby effective
on or about August 31, 2007, or on such other date as American Century may
decide, the American Century Florida Municipal Bond Fund ("Florida Municipal
Bond") will be reorganized into Tax-Free Bond. Both Florida Municipal Bond and
Tax-Free Bond are series of American Century Municipal Trust.
- --------------------------------------------------------------------------------
Proposal 3: To approve the conversion or "reclassification" of the Advisor Class
Shares of Tax-Free Bond, a series of American Century Municipal Trust, and the
American Century Utilities Fund ("Utilities"), a series of American Century
Quantitative Equity Funds, Inc., whereby effective on or about November 30, 2007
or on such other date as American Century may decide, all of the Advisor Class
shares will be reclassified as Investor Class shares of the same respective
Funds.
- --------------------------------------------------------------------------------
Each of the above proposed reorganizations shall hereinafter be individually
referred to as a "Reorganization" and collectively referred to as the
"Reorganizations." Each of the above proposed reclassifications shall
hereinafter be individually referred to as a "Reclassification" and collectively
referred to as the "Reclassifications." Each of the aforementioned Funds shall
individually be referred to as an "American Century Fund" or a "Fund" and
collectively referred to as the "American Century Funds" or the "Funds." Each of
the above referenced corporations and trusts may hereinafter be referred to as a
"Corporation" and collectively referred to as the "Corporations."
Your Board is seeking your proxy to vote FOR the proposals.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
This Proxy Statement/Prospectus is a proxy statement of the American Century
Funds for use in connection with the solicitation of your proxy to vote your
shares at the Meeting, and serves as a prospectus for each applicable American
Century Fund under the Securities Act of 1933, as amended (the "Securities
Act"), in connection with the issuance of shares to you pursuant to the terms of
the Reorganizations and/or Reclassifications.
This Proxy Statement/Prospectus sets forth concisely the information about the
American Century Funds that you should know before considering the
Reorganizations and/or Reclassifications, and should be retained for future
reference. If you are a shareholder of Arizona Municipal Bond or Florida
Municipal Bond this Proxy Statement/Prospectus is accompanied by the prospectus
for Tax-Free Bond, dated October 1, 2006. If you are a shareholder of any other
Fund(s), you will receive a prospectus of the Fund(s) you are currently invested
in along with this Proxy Statement/Prospectus. The Statement of Additional
Information, dated April 3, 2007, relating to this Proxy Statement/Prospectus,
contains additional information and has been filed by the American Century Funds
with the Securities and Exchange Commission ("SEC") and is incorporated herein
by reference. In addition, each of the following documents is incorporated by
reference (and legally considered to be part of the Proxy Statement/Prospectus):
1. A prospectus for Tax-Free Bond dated October 1, 2006;
2. A prospectus for Utilities dated May 1, 2006;
3. A combined prospectus for Arizona Municipal Bond and Florida Municipal
Bond dated October 1, 2006;
4. A statement of additional information for Tax-Free Bond, Arizona
Municipal Bond and Florida Municipal Bond dated October 1, 2006;
5. A statement of additional information for Utilities dated November 30,
2006;
6. An annual report dated May 31, 2006 and a semiannual report dated
November 30, 2006 for Tax-Free Bond;
7. An annual report dated May 31, 2006 and a semiannual report dated
November 30, 2006 for Arizona Municipal Bond and Florida Municipal
Bond; and
8. An annual report dated December 31, 2006 for Utilities.
References to the above-listed documents include any supplements to such
documents in effect as of the date of this Proxy Statement/Prospectus. Copies of
these materials and other information about the Funds may be obtained without
charge by writing to or calling American Century Investments at the address and
telephone number shown above. They are also available electronically at American
Century's Web site at americancentury.com.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE AMERICAN CENTURY FUNDS.
THE SHARES OFFERED BY THIS PROXY STATEMENT/PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THESE SHARES ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUNDS
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
TABLE OF CONTENTS
PAGE
SUMMARY
Introduction
Closing Dates
PROPOSALS WITH RESPECT TO THE APPROVAL OF THE AGREEMENTS AND PLANS OF
REORGANIZATION AND APPROVAL OF THE RECLASSIFICATIONS
PROPOSALS 1 & 2 - To Approve the Proposed Reorganizations of
Arizona Municipal Bond and Florida Municipal Bond
Reasons for the Proposed Reorganizations
Comparison of Investment Objectives, Policies and Risks
Purchase, Redemption and Exchange of Shares
Comparative Fee Tables
Arizona Municipal Bond and Florida Municipal Bond Annual Total Returns
The Investment Advisor
PROPOSAL 3 - To Approve the Proposed Reclassifications of Advisor Class
Shares as Investor Class Shares
Reasons for the Reclassifications of Advisor Class Shares as Investor
Class Shares
Consequences of the Reclassifications
Description of Fund Shares
Investment Objectives, Policies and Risks
Purchase, Redemption and Exchange of Shares
Comparative Fee Tables
Comparative Performance Tables
INFORMATION ABOUT THE REORGANIZATIONS
Terms of the Agreements and Plans of Reorganization
Costs of the Reorganizations
Reasons for the Reorganizations
Federal Income Tax Consequences of the Reorganizations
Fund Capitalization
Material Differences Between Rights of Shareholders
INFORMATION ABOUT THE RECLASSIFICATIONS
Terms of the Reclassifications
Costs of the Reclassifications
Reasons for the Reclassifications
Federal Income Tax Consequences
Description of the Fund Shares
Rights of Shareholders of Tax-Free Bond and Utilities
Voting Rights of Shareholders
Meetings of Shareholders
Fund Capitalization
INFORMATION ABOUT THE AMERICAN CENTURY FUNDS
General Information
Date, Time and Place of Meeting
Use and Revocation of Proxies
Voting Rights and Required Votes
Record Date and Outstanding Shares
Security Ownership of Certain Beneficial Owners and Management of the Funds
Other Service Providers
WHERE TO FIND ADDITIONAL INFORMATION
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
FORM OF AGREEMENT AND PLAN OF REORGANIZATION EXHIBIT A
FORM OF AMENDMENT TO THE CHARTER EXHIBIT B
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE EXHIBIT C
FINANCIAL HIGHLIGHTS EXHIBIT D
SUMMARY
This summary is qualified in its entirety by the additional information
contained elsewhere in this Proxy Statement/Prospectus, or incorporated by
reference into this Proxy Statement/Prospectus. A form of the Agreements and
Plans of Reorganization pursuant to which the Reorganizations will be conducted
is attached to this Proxy Statement/Prospectus as Exhibit A. For more complete
information, please read the prospectuses and statements of additional
information of Arizona Municipal Bond, Florida Municipal Bond and Tax-Free Bond,
series of American Century Municipal Trust; and Utilities, a series of American
Century Quantitative Equity Funds, Inc., as applicable, which accompany this
Proxy Statement/Prospectus.
INTRODUCTION
This Proxy Statement/Prospectus is furnished to you because you are entitled to
vote on one or more of the proposals described in this Proxy
Statement/Prospectus that will be considered at the Meeting. The Meeting will be
held on June 27, 2007.
The following is a brief summary of the proposals that will be voted upon at the
Meeting:
1. It is being proposed that Tax-Free Bond acquire all of the assets of Arizona
Municipal Bond, in exchange for Investor Class shares of Tax-Free Bond (the
"Arizona/Tax-Free Exchange"). Immediately following the Arizona/Tax-Free
Exchange, Arizona Municipal Bond will distribute the Investor Class shares of
Tax-Free Bond to holders of the Investor Class, A Class, B Class and C Class
shares of Arizona Municipal Bond, respectively (the "Arizona Fund
Distribution"). The Arizona/Tax-Free Exchange and the Arizona Fund Distribution
are collectively referred to in this Proxy Statement/Prospectus as the "Arizona
Fund Reorganization." If approved, as a result of the Arizona Fund
Reorganization, each holder of Investor Class, A Class, B Class, and C Class
shares of Arizona Municipal Bond will receive the same percentage of the
aggregate number of Investor Class shares of Tax-Free Bond issued in the Arizona
Fund Reorganization as he or she owned in Arizona Municipal Bond, having a total
net asset value ("NAV") equal to the total NAV of his or her Arizona Municipal
Bond holdings on the Closing Date (as hereafter defined).
2. It is being proposed that Tax-Free Bond acquire all of the assets of Florida
Municipal Bond, in exchange for Investor Class shares of Tax-Free Bond (the
"Florida/Tax-Free Exchange"). Immediately following the Florida/Tax-Free
Exchange, Florida Municipal Bond will distribute the Investor Class shares of
Tax-Free Bond to holders of the Investor Class, A Class, B Class and C Class
shares of Florida Municipal Bond, respectively (the "Florida Fund
Distribution"). The Florida/Tax-Free Exchange and the Florida Fund Distribution
are collectively referred to in this Proxy Statement/Prospectus as the "Florida
Fund Reorganization." If approved, as a result of the Florida Fund
Reorganization, each holder of Investor Class, A Class, B Class and C Class
shares of Florida Municipal Bond will receive the same percentage of the
aggregate number of Investor Class shares of Tax-Free Bond issued in the Florida
Fund Reorganization as he or she owned in the Florida Municipal Bond having a
total NAV equal to the total NAV of his or her Florida Municipal Bond holdings
on the Closing Date (as hereafter defined).
3. It is being proposed that all of the Advisor Class shares of Tax-Free Bond
and Utilities be reclassified as Investor Class shares of the same Funds. If
this proposal is approved, the Reclassification would be effective on the
Closing Date (as hereinafter defined). As a result of this Reclassification,
each shareholder of the Advisor Class shares of the aforementioned Funds will
become the owner of Investor Class shares of the same Funds, having a total NAV
equal to the total NAV of his or her holdings of the applicable Fund(s) on the
date of the Reclassification.
Each Board of Directors/Trustees of the aforementioned Funds shall be
collectively referred to as the "Boards." The Boards, including
Directors/Trustees who are not "interested persons" within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("1940 Act"),
have concluded that the Reorganizations are in the best interests of
shareholders of Arizona Municipal Bond, Florida Municipal Bond and Tax-Free Bond
and the Reclassifications are in the best interests of the Advisor Class and
Investor Class shareholders.
Consummation of either Reorganization is not conditioned upon the consummation
of the other Reorganization. Consummation of any one Reclassification is not
conditioned upon the consummation of any other Reclassification. If a
Reorganization or Reclassification does not receive shareholder approval,
American Century may ask for Board approval to liquidate the affected Fund or
class. In addition, if a significant number of Reclassification proposals do not
receive shareholder approval, then American Century may elect not to proceed
with any of them.
Each Reclassification will be a tax-free event under applicable provisions of
the Internal Revenue Code, as amended, so that no gain or loss will be
recognized by the American Century Funds or the American Century Funds'
shareholders. As a condition to its Reorganization, each Fund will receive an
opinion of Reed Smith, LLP that the Reorganization will be considered a tax-free
"reorganization" under applicable provisions of the Internal Revenue Code of
1986, as amended, so that no gain or loss will be recognized by either Arizona
Municipal Bond, Florida Municipal Bond, Tax-Free Bond or their respective
shareholders. The tax basis of the shares of Tax-Free Bond received by Arizona
Municipal Bond and Florida Municipal Bond shareholders will be the same as the
tax basis of their shares in Arizona Municipal Bond or Florida Municipal Bond.
CLOSING DATES
If all of the requisite approvals are obtained and certain conditions are either
met or waived, it is anticipated that the Reorganizations will be consummated
following the close of business on August 31, 2007 or on such other date as
American Century may decide (the "Closing Date") and that shareholders of
Arizona Municipal Bond and Florida Municipal Bond will receive shares of
Tax-Free Bond as of the next business day following the Closing Date. If the
requisite approvals are obtained, the Reclassifications in Proposal 3 will be
consummated following the close of business on November 30, 2007 (the "Closing
Date") or on such other date as American Century may decide. The aforementioned
Closing Dates may be collectively referred to as the "Closing Dates."
PROPOSALS WITH RESPECT TO THE APPROVAL OF THE AGREEMENTS AND PLANS OF
REORGANIZATION AND APPROVAL OF THE RECLASSIFICATIONS
PROPOSALS 1 & 2 - TO APPROVE THE PROPOSED REORGANIZATIONS OF ARIZONA
MUNICIPAL BOND AND FLORIDA MUNICIPAL BOND
ARIZONA MUNICIPAL BOND AND FLORIDA MUNICIPAL BOND
REASONS FOR THE PROPOSED REORGANIZATIONS
The Board of Trustees of American Century Municipal Trust ("Municipal Trust
Board") has determined that a combination of Florida Municipal Bond and Arizona
Municipal Bond (collectively, the "Acquired Funds") with Tax-Free Bond is the
best course of action for shareholders of the Acquired Funds. In reaching this
conclusion the Municipal Trust Board noted that the small size of the Acquired
Funds limits their ability to achieve certain benefits of large asset size, and
that the small size has made it difficult for the Acquired Funds to remain
viable. In addition, with respect to Florida Municipal Bond, the Municipal Trust
Board considered the adverse impact that the elimination of the Florida
intangibles tax would likely have on investment options and future sales of
Florida Municipal Bond.
The following tables show the total return performance of the Investor Class
shares of both Florida Municipal Bond and Arizona Municipal Bond, which are
based on net asset values, for the past five calendar years against their
performance benchmark, net sales of Arizona Municipal Bond and Florida Municipal
Bond for each calendar year, and their net assets at each calendar year end.
- -------------------------------- ---------- ---------- ----------- ---------- ----------
ARIZONA MUNICIPAL BOND 2002 2003 2004 2005 2006
- -------------------------------- ---------- ---------- ----------- ---------- ----------
INVESTOR CLASS SHARES 9.06% 3.94% 2.75% 2.34% 3.92%
- -------------------------------- ---------- ---------- ----------- ---------- ----------
LEHMAN BROTHERS MUNICIPAL 5-YEAR 9.00% 4.19% 2.95% 1.07% 3.38%
GENERAL OBLIGATIONS INDEX
- -------------------------------- ---------- ---------- ----------- ---------- ----------
NET SALES OF FUND SHARES $ 10.59 $ (5.86) $(6.23) $(0.14) $(2.75)
million million million million million
- -------------------------------- ---------- ---------- ----------- ---------- ----------
FUND NET ASSETS $72 $66 $59 $58 $55
million million million million million
- -------------------------------- ---------- ---------- ----------- ---------- ----------
- -------------------------------- ---------- ---------- ----------- ---------- ----------
FLORIDA MUNICIPAL BOND 2002 2003 2004 2005 2006
- -------------------------------- ---------- ---------- ----------- ---------- ----------
INVESTOR CLASS SHARES 9.34% 3.99% 2.54% 2.04% 3.75%
- -------------------------------- ---------- ---------- ----------- ---------- ----------
LEHMAN BROTHERS MUNICIPAL 5-YEAR 9.00% 4.19% 2.95% 1.07% 3.38%
GENERAL OBLIGATIONS INDEX
- -------------------------------- ---------- ---------- ----------- ---------- ----------
NET SALES OF FUND SHARES $ 14.52 $(8.23) $ 3.44 $ (13.95) $ (8.59)
million million million million million
- -------------------------------- ---------- ---------- ----------- ---------- ----------
FUND NET ASSETS $69 $60 $63 $48 $40
million million million million million
- -------------------------------- ---------- ---------- ----------- ---------- ----------
As the tables illustrate, despite the satisfactory performance of Arizona
Municipal Bond and Florida Municipal Bond relative to their performance
benchmark, net sales of the Acquired Funds' shares and the Acquired Funds' net
assets have not grown, but rather declined.
The advisor to the Acquired Funds, American Century Investment Management, Inc.
("American Century" or the "Advisor") believes that the Reorganizations will
result in a more viable investment for Arizona Municipal Bond and Florida
Municipal Bond shareholders. As shown below in the "Comparative Fee Tables," an
additional benefit to certain shareholders of the Acquired Funds will be a
significant reduction in expenses as a result of the Reorganizations. None of
the Acquired Funds' shareholders' expenses will increase as a result of the
Reorganizations.
The Municipal Trust Board has voted to recommend to shareholders, the approval
of the Reorganizations. In considering the Reorganizations, the Municipal Trust
Board took into consideration a number of factors, including: (1) the viability
of the Acquired Funds absent approval of the proposed Reorganizations and the
relative compatibility of the investment objectives, policies and limitations of
the Acquired Funds and Tax-Free Bond; (2) the greater long-term viability of
Tax-Free Bond and, in the case of Florida Municipal Bond, the redundancy with
Tax-Free Bond given the repeal of the Florida's intangible tax; (3) the adverse
impact that the elimination of the Florida intangibles tax would likely have on
investment options and future sales of Florida Municipal Bond; (4) the fact that
the Reorganizations are expected to be "tax-free" for federal income tax
purposes (and that the Funds will receive an opinion of counsel to this effect);
(5) that the proposed Reorganizations may result in lower fees, as a percentage
of net assets, for certain shareholders of Florida Municipal Bond and Arizona
Municipal Bond; and (6) the undertaking by American Century to pay all costs and
expenses of preparing, printing and mailing this Proxy Statement/Prospectus and
solicitation expenses of the Reorganizations.
The Municipal Trust Board concluded to recommend that the shareholders of
Arizona Municipal Bond and Florida Municipal Bond vote to approve the
Reorganizations. Pursuant to Rule 17a-8 under the 1940 Act, the Municipal Trust
Board, including a majority of the Trustees who are not interested persons,
separately determined that participation in the transaction will be in the best
interests of Florida Municipal Bond shareholders and Arizona Municipal Bond
shareholders and that the interests of such shareholders would not be diluted as
a result of effecting the Reorganizations.
The Municipal Trust Board likewise approved the Reorganizations on behalf of
Tax-Free Bond. Pursuant to Rule 17a-8 under the 1940 Act, the Municipal Trust
Board, including a majority of the Trustees who are not interested persons,
determined that participation in the Reorganizations was in the best interests
of Tax-Free Bond's shareholders and that the interests of existing Tax-Free Bond
shareholders would not be diluted as a result of effecting the Reorganizations.
Approval of the shareholders of Tax-Free Bond is not required to effect the
Reorganizations.
As a condition to its Reorganization, each Fund will receive an opinion of Reed
Smith, LLP that the Reorganization will be considered a tax-free
"reorganization" under applicable provisions of the Internal Revenue Code of
1986, as amended, so that no gain or loss will be recognized by Arizona
Municipal Bond, Florida Municipal Bond, Tax-Free Bond or their respective
shareholders. The tax basis of the shares of Tax-Free Bond received by Arizona
Municipal Bond and Florida Municipal Bond shareholders will be the same as the
tax basis of their shares in Arizona Municipal Bond or Florida Municipal Bond.
Consummation of one of the Reorganizations is not a condition to the closing of
the other Reorganization. If one or both Reorganizations are not approved by the
Acquired Funds' shareholders, American Century may ask the Board for authority
to liquidate one or both Funds.
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RISKS
INVESTMENT OBJECTIVES
The investment objectives of Arizona Municipal Bond and Florida Municipal Bond
differ materially from that of Tax-Free Bond, as indicated by the following
table.
- ---------------------------- ---------------------------------------------------
American Century Fund Investment Objective
- ---------------------------- ---------------------------------------------------
Arizona Municipal Bond Seeks safety of principal and high current income
that is exempt from federal and Arizona income
taxes.
- ---------------------------- ---------------------------------------------------
Florida Municipal Bond Seeks safety of principal and high current income
that is exempt from federal income tax and Florida
intangible personal property tax.
- ---------------------------- ---------------------------------------------------
Tax-Free Bond Seeks safety of principal and high current income
that is exempt from federal income tax.
- ---------------------------- ---------------------------------------------------
The material difference in investment objectives is that, while Tax-Free Bond
only seeks to be exempt from federal income taxes, Arizona Municipal Bond also
seeks to be exempt from Arizona income taxes and Florida Municipal Bond also
seeks to be exempt from the Florida intangible personal property tax. However,
Florida has repealed its intangible personal property tax effective January 1,
2007.
INVESTMENT EXPOSURE
Each Fund primarily invests in "quality debt securities" (a quality debt
security is one that has been rated by an independent rating agency in its top
four credit quality categories or determined by the Advisor to be of comparable
credit quality) and will invest at least 80% of its assets in debt securities
with interest payments exempt from regular federal income tax. Cities, counties
and other municipalities in the 50 states and U.S. territories (such as the
Commonwealth of Puerto Rico) usually issue these securities for public projects,
such as schools and roads.
Arizona Municipal Bond will invest at least 80% of its assets in municipal
securities issued by cities, counties and other municipalities in Arizona and
U.S. territories with interest payments exempt from Arizona income tax as well
as regular federal income tax. Historically, Florida Municipal Bond has invested
at least 80% of its assets in municipal securities issued by cities, counties
and other municipalities in Florida and U.S. territories with interest payments
exempt from the Florida intangible personal property tax, as well as regular
federal income tax. However, since Florida repealed its intangible personal
property tax, effective January 1, 2007, the Fund may invest to a greater extent
in municipal securities issued by states other than Florida.
Each Fund also may buy quality debt securities with interest payments exempt
from regular federal income tax, but not exempt from the federal alternative
minimum tax. Cities, counties and other municipalities usually issue these
securities (called "private activity bonds") to Fund for-profit private
projects, such as hospitals and athletic stadiums. No more than 20% of any
Fund's assets may be invested in these securities.
Although each Fund invests primarily in investment grade securities, up to 20%
of the value of each Fund's net assets may be invested in below investment-grade
securities (BB and below). The Funds also may invest in securities which, while
not rated, are determined by the Advisor to be of comparable credit quality to
those rated below investment-grade.
In the event of exceptional market or economic conditions, a Fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or cash-equivalent securities. To the extent a Fund assumes a defensive
position it will not be pursuing its investment objective and may generate
taxable income.
The Advisor is not limited to a specific weighted average maturity range.
However, the Advisor monitors a Fund's weighted average maturity, and seeks to
adjust it as appropriate, taking into account market conditions and other
relevant factors.
A Fund also may invest in derivative instruments such as options, futures
contracts, options on futures contracts, and swap agreements (including, but not
limited to, credit default swap agreements), or in mortgage- or asset-backed
securities, provided that such investments are in keeping with the Fund's
investment objective.
COMPARISON OF RISKS
The risks associated with investing in the Funds are similar.
Each Fund may invest all of its assets in securities rated in the lowest
investment-grade category (for example, Baa or BBB). The issuers of these
securities are more likely to pose a credit risk, that is, to have problems
making interest and principal payments, than issuers of higher-rated securities.
Each Fund may also invest part of its assets in securities rated below
investment-grade or that are unrated. By definition, the issuers of many of
these securities may have problems making interest and principal payments. Below
investment-grade municipal bonds are vulnerable to real or perceived changes in
the business climate and can be less liquid and more volatile.
Each Fund also may invest in derivative instruments. The use of derivative
instruments involves risks different from, or possibly greater than, the risks
associated with investing directly in securities and other traditional
instruments. Derivatives are subject to a number of risks including liquidity,
interest rate, market and credit risk. They also involve the risk of mispricing
or improper valuation, the risk that changes in the value of the derivative may
not correlate perfectly with the underlying asset, rate or index, and the risk
of default or bankruptcy of the other party to a swap agreement. Gains or losses
involving some futures, options and other derivatives may be substantial -- in
part because a relatively small price movement in these securities may result in
an immediate and substantial gain or loss for the Fund.
When interest rates change, a Fund's share value will be affected. Generally,
when interest rates rise, the Fund's share value will decline. The opposite is
true when interest rates decline. Funds with longer weighted average maturities
are more sensitive to interest rate changes.
Because the Funds invest primarily in municipal securities, they will be
sensitive to events that affect municipal markets.
ARIZONA MUNICIPAL BOND
Because Arizona Municipal Bond invests primarily in Arizona municipal
securities, it will be sensitive to events that affect Arizona's economy.
Arizona Municipal Bond may have a higher level of risk than Funds that invest in
a larger universe of securities.
FLORIDA MUNICIPAL BOND
Prior to the repeal of Florida's intangible personal property tax, effective
January 1, 2007, Florida Municipal Bond invested primarily in Florida municipal
securities. To the extent it continues to do so, it will be sensitive to events
that affect Florida's economy. Florida Municipal Bond may have a higher level of
risk than Funds that invest in a larger universe of securities.
For more information on the risks of investing in the Funds please see the
prospectuses for the Funds, which are incorporated by reference into this Proxy
Statement/Prospectus. The prospectus for Tax-Free Bond is included with this
Proxy Statement/Prospectus.
PURCHASE, REDEMPTION AND EXCHANGE OF SHARES
The following table highlights certain purchase, redemption and exchange
features of Arizona Municipal Bond and Florida Municipal Bond as compared to
such features of the Investor Class shares of Tax-Free Bond.
- ------------------------- ----------------------------------------- ----------------------------------
PURCHASE, REDEMPTION ARIZONA MUNICIPAL BOND AND FLORIDA TAX-FREE BOND -
AND EXCHANGE FEATURES MUNICIPAL BOND INVESTOR CLASS SHARES
- ------------------------- ----------------------------------------- ----------------------------------
Initial Sales Charge A Class shares: 4.50% is the maximum Investor Class shares: None
(as a percentage of sales charge applicable to A Class
offering price) shares (subject to the availability of
waivers and reduced sales charges)
B Class shares: None
C Class shares: None
Investor Class shares: None
- ------------------------- ----------------------------------------- ----------------------------------
Reductions and Waivers o Reductions in sales charge Not applicable because there is no
of Initial Sales Charges based upon amount invested. initial sales charge on Investor
There are no front-end sales Class shares.
charges for purchases of
$1,000,000 or more.
o Rights of Accumulation/
Account Aggregation
o Concurrent Purchases
o Letter of Intent
o Waivers for Certain Investors
- ------------------------- ----------------------------------------- ----------------------------------
Contingent Deferred A Class shares: Investments of Investor Class shares: None
Sales Charge (CDSC) $1,000,000 or more in A Class shares
may be subject to a contingent deferred
sales charge of 1.00% if the shares are
redeemed within one year of the date of
purchase.
B Class shares: 5.00% during the first
year of purchase, declines over the
next five years as shown in the
prospectus, and is eliminated after six
years.
C Class shares: 1.00% may be imposed on
redemptions of certain C shares that
are redeemed within 12 months of
purchase.
Investor Class shares: None
- ------------------------- ----------------------------------------- ----------------------------------
- ------------------------- ----------------------------------------- ----------------------------------
PURCHASE, REDEMPTION ARIZONA MUNICIPAL BOND AND FLORIDA TAX-FREE BOND -
AND EXCHANGE FEATURES MUNICIPAL BOND INVESTOR CLASS SHARES
- ------------------------- ----------------------------------------- ----------------------------------
CDSC Waivers Any applicable CDSC may be waived in Not Applicable
the following cases:
- redemptions through systematic
withdrawal plans not exceeding annually:
o 12% of the lesser of the
original purchase cost or current
market value for A Class shares;
o 12% of the original purchase
cost of B Class shares;
o 12% of the original purchase
cost or current market value for C
Class shares
- distributions from IRAs due to
attainment of age 59 1/2 for A Class
and for C Class shares;
- required minimum distributions from
retirement accounts upon reaching age
70 1/2;
- tax-free returns of excess
contributions to IRAs;
- redemptions due to death or
post-purchase disability;
- exchanges, unless the shares acquired
by exchange are redeemed within the
original CDSC period;
-IRA Rollovers from any American
Century Advisor Fund held in a
employer-sponsored retirement plan, for
A Class shares only;
-if no broker was compensated for the
sale.
- ------------------------- ----------------------------------------- --------------------------------------
Redemption Fees None. However, there is a $10 charge Same as Arizona Municipal Bond and
to redeem your shares by wire. Florida Municipal Bond
- ------------------------- ----------------------------------------- --------------------------------------
Maintenance Fee A Class Shares: None Investor Class Shares: $12.50
B Class Shares: None semi-annual fee for investors whose
C Class Shares: None total eligible investments with
Investor Class Shares: $12.50 American Century are less than
semiannual fee for investors whose $10,000. (See the Fund's prospectus
total eligible investments with for further information.) This fee is
American Century are less than $10,000. not applicable to shares held in a
(See the Funds' prospectus for further financial intermediary or retirement
information.) plan account.
- ------------------------- ----------------------------------------- --------------------------------------
Purchases/Redemptions By telephone, mail or fax, online, in Same as Arizona Municipal Bond and
person, or automatically Florida Municipal Bond
- ------------------------- ----------------------------------------- --------------------------------------
Redemptions Policies Reserves right to delay delivery of Same as Arizona Municipal Bond and
redemption proceeds up to seven days. Florida Municipal Bond
Any redemption request made within 15
days of an address change may be
required to be submitted in writing
with guaranteed signatures of all
authorized signers. If bank
information is changed a 15-day holding
period may be imposed before the
proceeds are wired to the bank.
If, during any 90-day period, a
shareholder redeems Fund shares worth
more than $250,000 (or 1% of the value
of the Fund's assets, if that
percentage is less than $250,000) then
the Fund reserves the right to pay part
or all of the redemption proceeds in
excess of this amount in readily
marketable securities instead of cash.
Shareholders can avoid being paid in
securities if they provide an
unconditional instruction to redeem at
least 15 days prior to the date on
which the redemption transaction is to
occur.
- ------------------------- ----------------------------------------- --------------------------------------
Exchanges A Class, B Class and C Class shares: Because there is no sales charge or
You may exchange shares of the Funds CDSC on Investor Class shares,
for shares of the same class of another shareholders may redeem and purchase
American Century Fund without a sales shares into any other Advisor,
charge if you meet the following Investor, or Institutional share
criteria: class without incurring a sales
charge. However, investors will
o The exchange is for a minimum have to meet the applicable minimum
of $100 initial investment when purchasing
o For an exchange that opens a new investments in these share
new account, the amount of the classes.
exchange must meet or exceed
the minimum account size
requirement for the Fund
receiving the exchange
For purposes of computing any
applicable CDSC on shares that have
been exchanged, the holding period will
begin as of the date of purchase of the
original Fund owned. Exchanges from a
money market Fund are subject to a
sales change on the Fund being
purchased, unless the money market
shares were acquired by exchange from a
Fund with a sales charge or by
reinvestment of dividends or capital
gains distributions.
Investor Class Shares:
Because there is no sales charge or
CDSC on Investor Class shares,
shareholders may redeem and purchase
shares into any other Advisor,
Investor, or Institutional share class
without incurring a sales charge.
However, investors will have to meet
the applicable minimum initial
investment when purchasing new
investments in these share classes.
- ------------------------- ----------------------------------------- --------------------------------------
Dividends and Distributions by the Fund generally Same as Arizona Municipal Bond and
Distributions consist of dividends and interest Florida Municipal Bond
received by the Fund, as well as
capital gains realized by the Fund on
the sale of investment securities.
Each Fund pays distributions from net
income monthly. Each Fund generally
pays capital gains distributions, if
any, once a year, usually in December.
A Fund may make more frequent
distributions, if necessary, to comply
with Internal Revenue Code provisions.
You will participate in Fund
distributions, when they are declared,
starting the next business day after
your purchase is effective. If you
redeem shares, you will receive any
distribution declared on the day you
redeem. If you redeem all shares, we
will include any distributions received
with your redemption proceeds.
For investors investing through taxable
accounts, we will reinvest
distributions unless you elect to have
dividends and/or capital gains sent to
another American Century account, to
your bank electronically, or to your
home address or to another person or
address by check.
- ------------------------- ----------------------------------------- --------------------------------------
COMPARATIVE FEE TABLES
The Funds, like all mutual funds, incur certain expenses in their operations.
These expenses include management fees, as well as the costs of maintaining
accounts, administration, providing shareholder liaison and distribution
services and other activities. Set forth in the tables below is information
regarding, applicable sales charges, fees and expenses of the Funds, and pro
forma fees for the Funds after giving effect to the Reorganizations.
ARIZONA MUNICIPAL BOND, FLORIDA MUNICIPAL BOND AND TAX-FREE BOND
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Arizona Municipal Bond Tax-Free
and Florida Municipal Bond Bond
- -------------------------------------- -------------------------------------------------------------
INVESTOR A CLASS B CLASS C CLASS PRO FORMA
CLASS INVESTOR CLASS
- ----------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) None 4.50% None None None
Imposed on Purchases
(as a percentage of offering price)
Maximum Deferred Sales Charge (Load) None None(1) 5.00%(2) 1.00%(3) None
(as a percentage of the original
offering price for B Class shares
or the lower of the original
offering price or redemption
proceeds for A and C Class shares)
Maximum Account Maintenance Fee $25(4) None None None $25(4)
(1) INVESTMENTS OF $1 MILLION OR MORE IN A CLASS SHARES MAY BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE OF 1.00% IF THE SHARES ARE REDEEMED WITHIN
ONE YEAR OF THE DATE OF PURCHASE.
(2) THE CHARGE IS 5.00% DURING THE FIRST YEAR AFTER PURCHASE, DECLINES OVER THE
NEXT FIVE YEARS AS SHOWN IN THE FUNDS' PROSPECTUS, AND IS ELIMINATED AFTER
SIX YEARS.
(3) THE CHARGE IS 1.00% DURING THE FIRST YEAR AFTER PURCHASE, AND IS ELIMINATED
THEREAFTER.
(4) APPLIES ONLY TO INVESTORS WHOSE TOTAL ELIGIBLE INVESTMENTS WITH AMERICAN
CENTURY ARE LESS THAN $10,000. SEE Account Maintenance Fee UNDER Investing
Directly with American Century IN THE FUNDS' PROSPECTUSES FOR MORE DETAILS.
THE FEE IS NOT APPLICABLE TO SHARES HELD IN A FINANCIAL INTERMEDIARY OR
RETIREMENT PLAN ACCOUNT.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
DISTRIBUTION AND
MANAGEMENT SERVICE (12B-1) OTHER TOTAL ANNUAL FUND
FEE(1) FEES(2) EXPENSES(3) OPERATING EXPENSES
- ------------------------------------------------------------------------------------------
Arizona Municipal Bond
Investor Class 0.48% None 0.01% 0.49%
- ------------------------------------------------------------------------------------------
A Class 0.48% 0.25% 0.01% 0.74%
- ------------------------------------------------------------------------------------------
B Class 0.48% 1.00% 0.01% 1.49%
- ------------------------------------------------------------------------------------------
C Class 0.48% 1.00% 0.01% 1.49%
- ------------------------------------------------------------------------------------------
Florida Municipal Bond
Investor Class 0.48% None 0.01% 0.49%
- ------------------------------------------------------------------------------------------
A Class 0.48% 0.25% 0.01% 0.74%
- ------------------------------------------------------------------------------------------
B Class 0.48% 1.00% 0.01% 1.49%
- ------------------------------------------------------------------------------------------
C Class 0.48% 1.00% 0.01% 1.49%
- ------------------------------------------------------------------------------------------
Tax-Free Bond - Investor 0.48% None 0.01% 0.49%
Class
- ------------------------------------------------------------------------------------------
Tax-Free Bond - 0.48% None 0.01% 0.49%
Investor Class Pro
Forma after giving
effect to the Arizona
Municipal Bond
Reorganization
- ------------------------------------------------------------------------------------------
Tax-Free Bond - 0.48% None 0.01% 0.49%
Investor Class Pro
Forma after giving
effect to the Florida
Municipal Bond
Reorganization
- ------------------------------------------------------------------------------------------
Tax-Free Bond - 0.48% None 0.01% 0.49%
Investor Class Pro
Forma after giving
effect to the Arizona
Fund Reorganization and
the Florida Municipal
Bond Reorganization
- -------------------------------------------------------------------------------------------
(1) THE FUNDS PAY THE ADVISOR A SINGLE, UNIFIED MANAGEMENT FEE FOR ARRANGING
ALL SERVICES NECESSARY FOR THE FUNDS TO OPERATE. THE FEE SHOWN IS BASED ON
ASSETS DURING A FUND'S MOST RECENT FISCAL YEAR. THE FUNDS HAVE A STEPPED
FEE SCHEDULE. AS A RESULT, THE FUNDS' UNIFIED MANAGEMENT FEE RATES
GENERALLY DECREASE AS ASSETS INCREASE AND INCREASE AS ASSETS DECREASE. FOR
MORE INFORMATION ABOUT THE UNIFIED MANAGEMENT FEE, SEE THE INVESTMENT
ADVISOR UNDER MANAGEMENT IN THE FUNDS' PROSPECTUSES.
(2) THE 12B-1 FEE IS DESIGNED TO PERMIT INVESTORS TO PURCHASE SHARES THROUGH
BROKER-DEALERS, BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL
INTERMEDIARIES. THE FEE MAY BE USED TO COMPENSATE SUCH FINANCIAL
INTERMEDIARIES FOR DISTRIBUTION AND OTHER SHAREHOLDER SERVICES. FOR MORE
INFORMATION, SEE MULTIPLE CLASS INFORMATION AND SERVICE, DISTRIBUTION AND
ADMINISTRATIVE FEES, IN THE FUNDS' PROSPECTUS.
(3) OTHER EXPENSES INCLUDE THE FEES AND EXPENSES OF THE FUNDS' INDEPENDENT
TRUSTEES AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST.
Fee Examples
EXAMPLE
The examples in the tables below are intended to help you compare the costs of
investing in the Funds with the costs of investing in other mutual funds. Of
course, your actual costs may be higher or lower. Assuming you . . .
o invest $10,000 in the Fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year
o incur the same operating expenses as shown above
.. . . your cost of investing in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Arizona Municipal Bond
Investor Class $50 $157 $274 $615
- --------------------------------------------------------------------------------
A Class $522 $676 $842 $1,325
- --------------------------------------------------------------------------------
B Class $551 $769 $909 $1,566
- --------------------------------------------------------------------------------
C Class $151 $469 $809 $1,767
- --------------------------------------------------------------------------------
Florida Municipal Bond
Investor Class $50 $157 $274 $615
- --------------------------------------------------------------------------------
A Class $522 $676 $842 $1,325
- --------------------------------------------------------------------------------
B Class $551 $769 $909 $1,566
- --------------------------------------------------------------------------------
C Class $151 $469 $809 $1,767
- --------------------------------------------------------------------------------
Tax-Free Bond
Pro Forma Investor Class $50 $157 $274 $615
- --------------------------------------------------------------------------------
The table above reflects a deduction for charges payable upon redemption. You
would pay the following expenses if you did not redeem your shares and thus did
not incur such charges:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Arizona Municipal Bond
Investor Class $50 $157 $274 $615
- --------------------------------------------------------------------------------
A Class $522 $676 $842 $1,325
- --------------------------------------------------------------------------------
B Class $151 $469 $809 $1,566
- --------------------------------------------------------------------------------
C Class $151 $469 $809 $1,767
- --------------------------------------------------------------------------------
Florida Municipal Bond
Investor Class $50 $157 $274 $615
- --------------------------------------------------------------------------------
A Class $522 $676 $842 $1,325
- --------------------------------------------------------------------------------
B Class $151 $469 $809 $1,566
- --------------------------------------------------------------------------------
C Class $151 $469 $809 $1,767
- --------------------------------------------------------------------------------
Tax-Free Bond
Pro Forma Investor Class $50 $157 $274 $615
- --------------------------------------------------------------------------------
ARIZONA MUNICIPAL BOND AND FLORIDA MUNICIPAL BOND ANNUAL TOTAL RETURNS
The following bar charts show the performance of the Funds' Investor Class
shares for each of the last 10 calendar years. They indicate the volatility of
the Funds' historical returns from year to year. Account fees and sales charges,
if applicable, are not reflected in the charts below. If they had been included,
returns would be lower than those shown. The returns of the Funds' other classes
of shares will differ from those shown in the charts, depending on the expenses
of those classes.
Arizona Municipal Bond -- Investor Class
The highest and lowest quarterly returns for the period reflected in the chart
are:
HIGHEST LOWEST
- --------------------------------------------------------------------------------
Arizona Municipal Bond 4.13% (3Q 2002) -1.85% (2Q 2004)
- --------------------------------------------------------------------------------
Florida Municipal Bond -- Investor Class
The highest and lowest quarterly returns for the period reflected in the chart
are:
HIGHEST LOWEST
- --------------------------------------------------------------------------------
Florida Municipal Bond 4.49% (3Q 2002) -2.07% (2Q 2004)
- --------------------------------------------------------------------------------
Average Annual Total Returns
The following table shows the average annual total returns of the Funds'
Investor Class shares calculated three different ways. Additional tables show
the average annual total returns of the Funds' other share classes calculated
before the impact of taxes. Returns assume the deduction of all sales loads,
charges and other fees associated with a particular class. Your actual returns
may vary depending on the circumstances of your investment. Return Before Taxes
shows the actual change in the value of Fund shares over the time periods shown,
but does not reflect the impact of taxes on Fund distributions or the sale of
Fund shares. The two after-tax returns take into account taxes that may be
associated with owning Fund shares. Return After Taxes on Distributions is a
Fund's actual performance, adjusted by the effect of taxes on distributions made
by the Fund during the periods shown. Return After Taxes on Distributions and
Sale of Fund Shares is further adjusted to reflect the tax impact on any change
in the value of Fund shares as if they had been sold on the last day of the
period.
After-tax returns are calculated using the historical highest federal marginal
income tax rates and do not reflect the impact of state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from
those shown. After-tax returns shown are not relevant to investors who hold Fund
shares through tax-deferred arrangements such as 401(k) plans or IRAs.
The benchmarks are unmanaged indices that have no operating costs and are
included in the table for performance comparison.
INVESTOR CLASS
FOR PERIODS ENDED DECEMBER 31, 2006 1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Arizona Municipal Bond
Return Before Taxes 3.92% 4.37% 4.85%
Return After Taxes on Distributions 3.92% 4.28% 4.73%
Return After Taxes on Distributions 3.98% 4.27% 4.70%
and Sale of Fund Shares
Lehman Brothers Municipal 5-Year 3.38% 4.09% 4.70%
General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- --------------------------------------------------------------------------------
Florida Municipal Bond
Return Before Taxes 3.75% 4.30% 4.98%
Return After Taxes on Distributions 3.75% 4.22% 4.79%
Return After Taxes on Distributions 3.88% 4.20% 4.76%
and Sale of Fund Shares
Lehman Brothers Municipal 5-Year 3.38% 4.09% 4.70%
General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- --------------------------------------------------------------------------------
A CLASS
FOR PERIODS ENDED DECEMBER 31, 2006 1 YEAR 5 YEARS LIFE OF CLASS(1)
- --------------------------------------------------------------------------------
Arizona Municipal Bond
Return Before Taxes -1.01% N/A 0.66%
Lehman Brothers Municipal 5-Year 3.38% N/A 1.98%(2)
General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- --------------------------------------------------------------------------------
Florida Municipal Bond
Return Before Taxes -1.14% N/A 0.40%
Lehman Brothers Municipal 5-Year 3.38% N/A 1.98%(2)
General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- --------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR THE A CLASS WAS FEBRUARY 27, 2004. ONLY CLASSES WITH
PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS FOR LIFE OF CLASS.
(2) SINCE FEBRUARY 28, 2004, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.
B CLASS
FOR PERIODS ENDED DECEMBER 31, 2006 1 YEAR 5 YEARS LIFE OF CLASS(1)
- --------------------------------------------------------------------------------
Arizona Municipal Bond
Return Before Taxes -1.11% N/A 0.53%
Lehman Brothers Municipal 5-Year 3.38% N/A 1.98%(2)
General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- --------------------------------------------------------------------------------
Florida Municipal Bond
Return Before Taxes -1.27% N/A 0.22%
Lehman Brothers Municipal 5-Year 3.38% N/A 1.98%(2)
General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- --------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR THE B CLASS WAS FEBRUARY 27, 2004. ONLY CLASSES WITH
PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS FOR LIFE OF CLASS.
(2) SINCE FEBRUARY 28, 2004, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.
C CLASS
FOR PERIODS ENDED DECEMBER 31, 2006 1 YEAR 5 YEARS LIFE OF CLASS(1)
- --------------------------------------------------------------------------------
Arizona Municipal Bond
Return Before Taxes 2.89% N/A 1.54%
Lehman Brothers Municipal 5-Year 3.38% N/A 1.98%(2)
General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- --------------------------------------------------------------------------------
Florida Municipal Bond
Return Before Taxes 2.72% N/A 1.27%
Lehman Brothers Municipal 5-Year 3.38% N/A 1.98%(2)
General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- --------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR THE C CLASS WAS FEBRUARY 27, 2004. ONLY CLASSES WITH
PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS FOR LIFE OF CLASS.
(2) SINCE FEBRUARY 28, 2004, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.
TAX FREE BOND ANNUAL TOTAL RETURNS
The following bar chart shows the performance of Tax-Free Bond's Investor Class
shares for each of the last 10 calendar years. It indicates the volatility of
the Fund's historical returns from year to year. Account fees are not reflected
in the charts below. If they had been included, returns would be lower than
those shown. The returns of the shares of other classes of Tax-Free Bond will
differ from those shown in the chart, depending on the expenses of that class.
INVESTOR CLASS
The highest and lowest quarterly returns for the period reflected in the bar
chart are:
HIGHEST LOWEST
- --------------------------------------------------------------------------------
Tax-Free Bond 4.51% (3Q 2002) -2.09% (2Q 2004)
- --------------------------------------------------------------------------------
The following table shows the average annual total returns of the Tax-Free
Bond's Investor Class shares calculated three different ways.
Return Before Taxes shows the actual change in the value of Fund shares over the
time periods shown, but does not reflect the impact of taxes on Fund
distributions or the sale of Fund shares. The two after-tax returns take into
account taxes that may be associated with owning Fund shares. Return After Taxes
on Distributions is a Fund's actual performance, adjusted by the effect of taxes
on distributions made by the Fund during the periods shown. Return
After Taxes on Distributions and Sale of Fund Shares is further adjusted to
reflect the tax impact on any change in the value of Fund shares as if they had
been sold on the last day of the period. After-tax returns are calculated using
the historical highest federal marginal income tax rates and do not reflect the
impact of state and local taxes. Actual after-tax returns depend on an
investor's tax situation and may differ from those shown. After-tax returns
shown are not relevant to investors who hold Fund shares through tax-deferred
arrangements such as 401(k) plans or IRAs. After-tax returns are shown only for
Investor Class shares. After-tax returns for other share classes will vary.
The benchmark is an unmanaged index that has no operating costs and is included
in each table for performance comparison.
INVESTOR CLASS
FOR PERIODS ENDED DECEMBER 31, 2006 1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Return Before Taxes 4.11% 4.44% 4.93%
Return After Taxes on Distributions 4.11% 4.42% 4.84%
Return After Taxes on Distributions 4.04% 4.34% 4.79%
and Sale of Fund Shares
Lehman Brothers Municipal 3.38% 4.09% 4.70%
5-Year General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- --------------------------------------------------------------------------------
THE INVESTMENT ADVISOR
The Funds' Advisor has been managing mutual funds since 1958 and is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The Advisor is responsible for managing the investment portfolio of the Funds
and directing the purchase and sale of their investment securities. The Advisor
also arranges for transfer agency, custody and all other services necessary for
the Funds to operate.
For the services it provides to the Funds, the Advisor receives a unified
management fee based on a percentage of the daily net assets of each class of
shares of the Funds. The management fee is calculated daily and paid monthly in
arrears. Out of each Fund's fee, the advisor pays all expenses of managing and
operating that Fund except brokerage expenses, taxes, interest, fees and
expenses of the independent trustees (including legal counsel fees of legal
counsel to the independent trustees), and extraordinary expenses. A portion of
each Fund's management fee may be paid by the Advisor to unaffiliated third
parties who provide recordkeeping and administrative services that would
otherwise be performed by an affiliate of the Advisor.
The percentage rate used to calculate the management fee for each class of
shares of a Fund is determined daily using a two-component formula that takes
into account (i) the daily net assets of the accounts managed by the Advisor
that are in the same broad investment category as the Fund (the Category Fee)
and (ii) the assets of all funds in the American Century family of funds (the
Complex Fee). The statement of additional information of the Funds contains
detailed information about the calculation of the management fee.
MANAGEMENT FEES PAID BY THE FUNDS TO
THE ADVISOR AS A PERCENTAGE OF
AVERAGE NET ASSETS FOR THE
FISCAL YEAR ENDED MAY 31, 2006 INVESTOR CLASS A CLASS B CLASS C CLASS
Arizona Municipal Bond 0.48% 0.48% 0.48% 0.48%
Florida Municipal Bond 0.48% 0.48% 0.48% 0.48%
Tax-Free Bond 0.48% N/A N/A N/A
A discussion regarding the basis for the Municipal Trust Board's approval of the
Funds' investment advisory contracts with the Advisor is available in the Funds'
reports to shareholders dated May 31, 2006.
THE FUND MANAGEMENT TEAM
The Advisor uses teams of portfolio managers and analysts, organized by broad
investment categories such as money markets and municipal bonds, in its
management of fixed-income funds. Representatives of these teams serve on the
firm's Macro Strategy Team, which is responsible for periodically adjusting the
funds' strategic investment parameters based on economic and market conditions.
The funds' lead portfolio managers are responsible for security selection and
portfolio construction for the funds within these strategic parameters, as well
as compliance with stated investment objectives and cash flow monitoring. Other
members of the investment teams provide research and analytical support but
generally do not make day-to-day investment decisions for the Funds. The
individuals listed below are primarily responsible for the day-to-day management
of the funds. As shown below, the same portfolio managers are primarily
responsible for the day-to-day management of the Acquired Funds and the
Acquiring Fund.
ARIZONA MUNICIPAL BOND
FLORIDA MUNICIPAL BOND
TAX-FREE BOND
ROBERT J. MILLER (LEAD PORTFOLIO MANAGER)
Mr. Miller, Vice President and Portfolio Manager, has been a member of the Fund
management teams since December 2001. He joined American Century in June 1998
and became a portfolio manager in February 2001. He has a bachelor's degree in
business administration-finance from San Jose State University and an MBA from
New York University.
STEVEN M. PERMUT (MACRO STRATEGY TEAM REPRESENTATIVE)
Mr. Permut, Senior Vice President and Senior Portfolio Manager, has been a
member of the Fund management teams since July 2001. He joined American Century
in June 1987 and became a portfolio manager in June 1990. He has a bachelor's
degree in business and geography from State University of New York - Oneonta and
an MBA in finance from Golden Gate University - San Francisco.
The Funds' statement of additional information provides additional information
about the other accounts managed by the portfolio managers, if any, the
structure of their compensation, and their ownership of Fund securities.
For further information on the performance of the Funds, please see
"Management's Discussion of Fund Performance" attached hereto as Exhibit C. The
Financial Highlights for the Funds are attached hereto as Exhibit D and in your
Fund's prospectus.
PROPOSAL 3 - TO APPROVE THE PROPOSED RECLASSIFICATIONS OF ADVISOR CLASS SHARES
AS INVESTOR CLASS SHARES
TAX-FREE BOND AND UTILITIES
REASONS FOR THE RECLASSIFICATIONS OF ADVISOR CLASS SHARES AS INVESTOR CLASS
SHARES
At its meeting on December 8, 2006, the Boards of the applicable Funds,
including Trustees/Directors who are not "interested persons" within the meaning
of Section 2(a)(19) of the 1940 Act, concluded that the Reclassifications are in
the best interests of the Advisor Class shareholders. This determination was
made after the Board considered the consistently low balance in the Advisor
Class of Tax-Free Bond, and concluded that the Reclassification of the Advisor
Class shares of Tax-Free Bond as Investor Class shares of the same Fund would
result in a beneficial decrease in the total expense ratio for affected
shareholders. Similarly, the Board of Directors of American Century Quantitative
Equity Funds, Inc. considered the low balance and unprofitable nature of the
Advisor Class of Utilities and concluded that the Reclassification of the
Advisor Class shares as Investor Class shares would benefit shareholders by
decreasing the total expense ratio for their shares.
Each Reclassification will be considered a tax-free event under applicable
provisions of the Internal Revenue Code, as amended, so that no gain or loss
will be recognized by the American Century Funds or the American Century Funds'
shareholders.
CONSEQUENCES OF THE RECLASSIFICATIONS
If shareholders approve the Reclassifications, holders of Advisor Class shares
will have their shares reclassified as Investor Class shares of the same Fund.
The net asset value of your investment in the Fund will not change as a result
of a Reclassification. Investor Class shares will have a lower total expense
ratio than the Advisor Class share. It is anticipated that there will not be any
tax consequences as a result of the Reclassification. As previously noted, if
the Reclassification is approved, it will be effective on the Closing Date. If
one or both of the Reclassifications are not approved by the shareholders, we
may ask the Boards for authority to liquidate one or both of the Advisor Classes
of the Funds.
DESCRIPTION OF FUND SHARES
Currently, the Investor Class shares have a total expense ratio 25 basis points
lower than that of Advisor Class shares. Neither share class is subject to a
sales charge. Investor Class shareholders whose total eligible investment with
American Century is less than $10,000 may be subject to a $25 account
maintenance fee. This fee is not applicable to shares held in a financial
intermediary or retirement plan account. The applicable management and Rule
12b-1 fees for the share classes are as follows:
TOTAL MANAGEMENT
MANAGEMENT FEE AND
AMERICAN CENTURY FUND CLASS FEE RULE 12B-1 FEE RULE 12B-1 FEE(1)
===================== ============ ============ ============== ===============
Tax-Free Bond Advisor 0.23% 0.50% 0.73%
Investor 0.48% None 0.48%
===================== ============= =========== ============== ===============
Utilities Advisor 0.42% 0.50% 0.92%
Investor 0.67% None 0.67%
===================== ============= =========== ============== ===============
(1) Does not include "Other Expenses." See Annual Fund Operating Expenses table.
Separate from the Reclassification proposal contained in this Proxy
Statement/Prospectus, the Boards recently approved a proposal to change the fee
structure of the Advisor Class. As an Advisor Class shareholder, you will
receive a separate proxy statement describing this proposal in greater detail
and will have an opportunity to vote on it. If approved by the Advisor Class
shareholders, the Rule 12b-1 fee of the Advisor Class would be reduced 25 basis
points from 0.50% to 0.25% and the corresponding management fee would
simultaneously increase 25 basis points, resulting in no net change to the total
expense ratio. If the shareholders of the Advisor Class do not approve the
management fee change, then the Rule 12b-1 fee would remain at 0.50% and the
management fee would continue at its current level. The proposed modification to
the Advisor Class fee structure would make the class more consistent with
industry practice and American Century's internal pricing structure.
Irrespective of whether the Advisor Class shareholders pass the proposal, the
total annual Fund operating expense will not change. If approved, the
Reclassifications will result in the current Advisor Class shareholders having a
lower expense ratio. If approved, the fee structure change would not result in
current Advisor Class shareholders having a lower expense ratio. If the
Reclassification is approved by shareholders, the Advisor Class shares would
cease to exist; the proposal to change the fee structure of the Advisor Class
shares would become moot; and therefore, even if approved, the change in fee
structure would not take effect.
INVESTMENT OBJECTIVES, POLICIES AND RISKS
Since the Advisor Class and the Investor Class shares of a Fund represent
interests in the same portfolio, they share identical investment objectives,
policies and risks. The investment objectives of these Funds are listed in the
following table:
- ----------------------------- --------------------------------------------------
AMERICAN CENTURY FUND INVESTMENT OBJECTIVE
- ----------------------------- --------------------------------------------------
Tax-Free Bond Seeks safety of principal and high current income
that is exempt from federal income tax.
- ----------------------------- --------------------------------------------------
Utilities Seeks current income and long-term growth of
capital and income.
- ----------------------------- --------------------------------------------------
Reference is hereby made to the Funds' prospectuses and statements of additional
information, all of which are incorporated herein by reference. These documents
set forth in full the investment objectives, policies, and investment
limitations of each Fund, and include a full discussion of the risks inherent in
investments in each Fund.
PURCHASE, REDEMPTION AND EXCHANGE OF SHARES
The following table highlights certain purchase, redemption and exchange
features of the Advisor and Investor Classes of Tax-Free Bond and Utilities.
- ------------------------------------- ----------------------------------- -----------------------------------
PURCHASE, REDEMPTION AND EXCHANGE ADVISOR CLASS INVESTOR CLASS
FEATURES
- ------------------------------------- ----------------------------------- -----------------------------------
Minimum Initial Investment for o Broker-Dealer Sponsored Same as Advisor Class
Tax-Free Bond Wrap program accounts and/or
fee-based accounts: No
minimum
o Coverdell Educate
Savings Accounts: $5000
o Financial
Intermediaries: $250
o All other accounts: $5000
- ------------------------------------- ----------------------------------- -----------------------------------
Minimum Initial Investment for o Coverdell Educate Same as Advisor Class
Utilities Savings Accounts: $2000
o All other accounts: $2500
- ------------------------------------- ----------------------------------- -----------------------------------
Minimum Subsequent Investments o Financial Same as Advisor Class
(applicable only to Tax-Free Bond) Intermediaries: No Minimum
o All other accounts: $50
- ------------------------------------- ----------------------------------- -----------------------------------
Initial Sales Charge (as a None Same as Advisor Class
percentage of offering price)
- ------------------------------------- ----------------------------------- -----------------------------------
Reductions and Waivers of Initial Not Applicable Same as Advisor Class
Sales Charges
- ------------------------------------- ----------------------------------- -----------------------------------
Redemption Fees None. However, there is a $10 Same as Advisor Class
charge to redeem your shares by
wire.
- ------------------------------------- ----------------------------------- -----------------------------------
Maintenance Fee Not Applicable Investor Class Shares: $12.50
semi-annual fee for investors
whose total eligible investments
with American Century is less
than $10,000. (See the Fund's
prospectus for further
information). This fee is not
applicable to shares held in a
financial intermediary or retirement
plan account.
- ------------------------------------- ----------------------------------- -----------------------------------
Purchases/Redemptions By mail, fax, telephone, online, Same as Advisor Class
in person or automatically.
- ------------------------------------- ----------------------------------- -----------------------------------
Redemption Policies The Fund reserves the right to Same as Advisor Class
delay delivery of redemption
proceeds up to seven days.
Any redemption request made
within 15 days of an address
change may be required to be
submitted in writing with
guaranteed signatures of all
authorized signers. If bank
information is changed a 15-day
holding period may be imposed
before the proceeds are wired to
the bank.
There is a $10 charge for
redemption requests made by a
wire transfer.
The Fund reserves the right to
redeem in kind (i.e. in
securities rather than cash) if
during any 90-day period you
redeem Fund shares worth more
than $250,000 or 1% of the value
of the Fund's assets if that
amount is less than $250,000.
- ------------------------------------- ----------------------------------- -----------------------------------
Exchanges Because there is no sales charge Same as Advisor Class
or CDSC on Advisor Class shares,
shareholders may redeem and
purchase shares into any other
Advisor, Investor, or
Institutional share class without
incurring a sales charge.
However, investors will have to
meet the applicable minimum
initial investment when
purchasing new investments in
these share classes.
- ------------------------------------- ----------------------------------- -----------------------------------
COMPARATIVE FEE TABLES
The Funds, like all mutual funds, incur certain expenses in their operations.
These expenses include management fees, as well as the costs of maintaining
accounts, administration, providing shareholder liaison and distribution
services and other activities. Set forth in the tables below is information
regarding fees and expenses of the Funds and pro forma fees for the Funds after
giving effect to the Reclassifications.
TAX-FREE BOND
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
Advisor Class Investor Class Pro Forma
Investor
Class
- --------------------------------------------------------------------------------
Maximum Account Maintenance Fee N/A $25(1) $25(1)
- --------------------------------------------------------------------------------
(1) APPLIES ONLY TO INVESTORS WHOSE TOTAL ELIGIBLE INVESTMENTS WITH AMERICAN
CENTURY ARE LESS THAN $10,000. SEE ACCOUNT MAINTENANCE FEE UNDER INVESTING
DIRECTLY WITH AMERICAN CENTURY IN THE FUNDS' PROSPECTUS FOR MORE DETAILS.
THIS FEE IS NOT APPLICABLE TO SHARES HELD IN A FINANCIAL INTERMEDIARY OR
RETIREMENT PLAN ACCOUNT.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FUND NAME CLASS FEE(1) (12B-1) FEES(2) EXPENSES(3) EXPENSES
- --------------------------------------------------------------------------------------------
Tax-Free Bond Advisor Class 0.23% 0.50% 0.01% 0.74%
- --------------------------------------------------------------------------------------------
Investor 0.48% None 0.01% 0.49%
- --------------------------------------------------------------------------------------------
Pro Forma Investor 0.48% None 0.01% 0.49%
- --------------------------------------------------------------------------------------------
(1) THE FUND PAYS THE ADVISOR A SINGLE, UNIFIED MANAGEMENT FEE FOR ARRANGING
ALL SERVICES NECESSARY FOR THE FUND TO OPERATE. THE FEE SHOWN IS BASED ON
ASSETS DURING THE FUND'S MOST RECENT FISCAL YEAR. THE FUND HAS A STEPPED
FEE SCHEDULE. AS A RESULT, THE FUND'S UNIFIED MANAGEMENT FEE RATE GENERALLY
DECREASES AS ASSETS INCREASE AND INCREASES AS ASSETS DECREASE. FOR MORE
INFORMATION ABOUT THE UNIFIED MANAGEMENT FEE, INCLUDING AN EXPLANATION OF
STRATEGY ASSETS, SEe "The Investment Advisor" UNDER Management IN THE
FUNDS' PROSPECTUS.
(2) THE 12B-1 FEE IS DESIGNED TO PERMIT INVESTORS TO PURCHASE SHARES THROUGH
BROKER-DEALERS, BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL
INTERMEDIARIES. THE FEE MAY BE USED TO COMPENSATE SUCH FINANCIAL
INTERMEDIARIES FOR DISTRIBUTION AND OTHER SHAREHOLDER SERVICES. IN
ADDITION, HALF OF THE ADVISOR CLASS 12B-1 FEE (0.25%) IS FOR ONGOING
RECORDKEEPING AND ADMINISTRATIVE SERVICES PROVIDED BY FINANCIAL
INTERMEDIARIES, WHICH WOULD OTHERWISE BE PAID BY THE ADVISOR OUT OF THE
UNIFIED MANAGEMENT FEE. THE ADVISOR HAS REDUCED ITS UNIFIED MANAGEMENT FEE
BY 0.25% FOR ADVISOR CLASS SHARES, BUT THE FEE FOR CORE INVESTMENT ADVISORY
SERVICES IS THE SAME FOR ALL CLASSES. FOR MORE INFORMATION, SEE Multiple
Class Information AND Service, Distribution and Administrative Fees, IN THE
FUNDS' PROSPECTUS.
(3) OTHER EXPENSES INCLUDE THE FEES AND EXPENSES OF THE FUND'S INDEPENDENT
TRUSTEES AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in the Fund with the costs of investing in other mutual funds. Of
course, your actual costs may be higher or lower. Assuming you . . .
o invest $10,000 in the Fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year
o incur the same operating expenses as shown above
.. . . your cost of investing in the Fund would be:
FUND NAME CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Tax-Free Bond Advisor Class $75 $236 $411 $916
- --------------------------------------------------------------------------------
Investor Class $50 $157 $274 $615
- --------------------------------------------------------------------------------
Pro Forma Investor Class $50 $157 $274 $615
- --------------------------------------------------------------------------------
UTILITIES
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
Advisor Class Investor Class Pro Forma
Investor
Class
- --------------------------------------------------------------------------------
Maximum Account Maintenance Fee N/A $25(1) $25(1)
- --------------------------------------------------------------------------------
(1) APPLIES ONLY TO INVESTORS WHOSE TOTAL ELIGIBLE INVESTMENTS WITH AMERICAN
CENTURY ARE LESS THAN $10,000. SEE ACCOUNT MAINTENANCE FEE UNDER INVESTING
DIRECTLY WITH AMERICAN CENTURY FOR MORE DETAILS. THIS FEE IS NOT APPLICABLE
TO SHARES HELD IN A FINANCIAL INTERMEDIARY OR RETIREMENT PLAN ACCOUNT.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FUND NAME CLASS FEE(1) (12B-1) FEES(2) EXPENSES(3) EXPENSES
- -----------------------------------------------------------------------------------------
Utilities Advisor Class 0.42% 0.50% 0.01% 0.93%
- -----------------------------------------------------------------------------------------
Investor 0.67% None 0.01% 0.68%
- -----------------------------------------------------------------------------------------
Pro Forma Investor 0.67% None 0.01% 0.68%
- -----------------------------------------------------------------------------------------
(1) THE FUND PAYS THE ADVISOR A SINGLE, UNIFIED MANAGEMENT FEE FOR ARRANGING
ALL SERVICES NECESSARY FOR THE FUND TO OPERATE. THE FEE SHOWN IS BASED ON
ASSETS DURING THE FUND'S MOST RECENT FISCAL YEAR. THE FUND HAS A STEPPED
FEE SCHEDULE. AS A RESULT, THE FUND'S UNIFIED MANAGEMENT FEE RATE GENERALLY
DECREASES AS FUND ASSETS INCREASE AND INCREASES AS FUND ASSETS DECREASE.
FOR MORE INFORMATION ABOUT THE UNIFIED MANAGEMENT FEE, SEE "The Investment
Advisor" UNDER Management in the Funds' prospectus.
(2) THE 12B-1 FEE IS DESIGNED TO PERMIT INVESTORS TO PURCHASE SHARES THROUGH
BROKER-DEALERS, BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL
INTERMEDIARIES. THE FEE MAY BE USED TO COMPENSATE SUCH FINANCIAL
INTERMEDIARIES FOR DISTRIBUTION AND OTHER SHAREHOLDER SERVICES. IN
ADDITION, HALF OF THE ADVISOR CLASS 12B-1 FEE (0.25%) IS FOR ONGOING
RECORDKEEPING AND ADMINISTRATIVE SERVICES PROVIDED BY FINANCIAL
INTERMEDIARIES, WHICH WOULD OTHERWISE BE PAID BY THE ADVISOR OUT OF THE
UNIFIED MANAGEMENT FEE. THE ADVISOR HAS REDUCED ITS UNIFIED MANAGEMENT FEE
BY 0.25% FOR ADVISOR CLASS SHARES, BUT THE FEE FOR CORE INVESTMENT ADVISORY
SERVICES IS THE SAME FOR ALL CLASSES. FOR MORE INFORMATION, SEE Multiple
Class Information AND Service, Distribution and Administrative Fees, IN THE
FUNDS' PROSPECTUS.
(3) OTHER EXPENSES INCLUDE THE FEES AND EXPENSES OF THE FUND'S INDEPENDENT
DIRECTORS AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in the Fund with the costs of investing in other mutual funds. Of
course, your actual costs may be higher or lower. Assuming you . . .
o invest $10,000 in the Fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year
o incur the same operating expenses as shown above
.. . . your cost of investing in the Fund would be:
FUND NAME CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Utilities Advisor Class $95 $296 $513 $1,139
Investor Class $69 $217 $378 $844
- --------------------------------------------------------------------------------
Pro Forma Investor Class $69 $217 $378 $844
- --------------------------------------------------------------------------------
COMPARATIVE PERFORMANCE TABLES
AVERAGE ANNUAL TOTAL RETURNS
The following tables show the average annual total returns of the Funds'
Investor Class and Advisor shares. Return Before Taxes shows the actual change
in the value of fund shares over the time periods shown, but does not reflect
the impact of taxes on fund distributions or the sale of fund shares.
The benchmark is an unmanaged index that has no operating costs and is included
in each table for performance comparison.
TAX-FREE BOND
Advisor Class Investor Class
- ------------------------------------------------------------------------------------------
FOR PERIODS ENDED DECEMBER 31, 2006 LIFE OF
1 YEAR CLASS(1) 1 YEAR 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------
Return Before Taxes 3.86% 3.39% 4.11% 4.44% 4.93%
Lehman Brothers Municipal 3.38% 2.93%(2) 3.38% 4.09% 4.70%
5-Year General Obligation Index
(reflects no deduction for fees,
expenses or taxes)
- ------------------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR TAX-FREE BOND ADVISOR CLASS IS JULY 29, 2005.
(2) SINCE JULY 31, 2005, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR WHICH
DATA IS AVAILABLE.
UTILITIES
Advisor Class Investor Class
- ---------------------------------------------------------------------------------------------------
LIFE OF
FOR PERIODS ENDED DECEMBER 31, 2006 1 YEAR 5 YEARS CLASS(1) 1 YEAR 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
Return Before Taxes 24.62% 9.44% 6.35% 24.99% 9.73% 9.69%
S&P 500(R) Index 15.79% 6.19% 4.30%(2) 15.79% 6.19% 8.42%
(reflects no deduction for fees,
expenses or taxes)
(1) THE INCEPTION DATE FOR THE ADVISOR CLASS IS JUNE 25, 1998.
(2) SINCE JUNE 30, 1998, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR WHICH
DATA IS AVAILABLE.
For further information on the performance of the Funds, please see
"Management's Discussion of Fund Performance" attached hereto as Exhibit C. For
further information regarding the financial history of Advisor Class and
Investor Class of the Funds, please see "Financial Highlights" attached hereto
as Exhibit D and your Fund's prospectus.
INFORMATION ABOUT THE REORGANIZATIONS
TERMS OF THE AGREEMENTS AND PLANS OF REORGANIZATION
Set forth below is a summary of certain material terms of the Agreements and
Plans of Reorganization ("Plans"). This summary is qualified in its entirety by
the terms and provisions of the form of Plan which is attached to this Proxy
Statement/Prospectus as Exhibit A.
The Plans provide that all of the assets of Arizona Municipal Bond and Florida
Municipal Bond will be transferred to Tax-Free Bond at 4:00 p.m., Eastern Time,
on the Closing Date of the Reorganizations (which is expected to be on or about
August 31, 2007). In exchange for the transfer of these assets, Tax-Free Bond
will simultaneously issue a number of full and fractional shares to each of
Arizona Municipal Bond and Florida Municipal Bond equal in value to the
aggregate net asset value of the respective Funds calculated at the time of the
Reorganizations. The Plans contemplate that the Acquired Funds will discharge
all of its liabilities and obligations prior to the Closing Date other than
ordinary course liabilities reflected in the Acquired Fund's net asset value
incurred by the Acquired Fund prior to the Closing Date in connection with its
on-going business operations (including accrued fees and expenses and payables
for securities purchased or for shares redeemed). Tax-Free Bond shall not assume
or agree to pay, satisfy, discharge or perform any contingent liabilities, or
any liabilities arising under any plan adopted by the Acquired Funds under Rule
12b-1 with respect to the sale of the Acquired Funds' shares prior to the
Closing Date.
When calculating the value of the assets of Arizona Municipal Bond and Florida
Municipal Bond for purposes of each Reorganization, the net asset values will be
determined in accordance with Tax-Free Bond's valuation procedures. However,
since the valuation procedures used by Tax-Free Bond are identical in most
respects to those used by Arizona Municipal Bond and Florida Municipal Bond,
there are not anticipated to be differences in the valuation methods used to
value the securities held by Arizona Municipal Bond and Florida Municipal Bond
at the time of the Reorganizations.
Following the transfer of assets in exchange for shares of Tax-Free Bond,
Arizona Municipal Bond and Florida Municipal Bond will distribute all of the
shares of Tax-Free Bond pro rata to their shareholders of record in complete
liquidation of Arizona Municipal Bond and Florida Municipal Bond. Shareholders
of Arizona Municipal Bond and Florida Municipal Bond owning shares at the time
of the Reorganization will receive the same percentage of the aggregate number
of corresponding Tax-Free Bond shares issued as such shareholder owned in
Arizona Municipal Bond and Florida Municipal Bond at the time of the
Reorganizations. Such distribution will be accomplished by the establishment of
accounts in the names of each Arizona Municipal Bond and Florida Municipal Bond
shareholder on the share records of Tax-Free Bond's transfer agent. Each account
will receive the respective pro rata number of full and fractional Tax-Free Bond
shares due to the shareholder of Arizona Municipal Bond and Florida Municipal
Bond. Arizona Municipal Bond and Florida Municipal Bond will then be terminated.
Tax-Free Bond Fund does not issue share certificates to shareholders. Tax-Free
Bond shares to be issued will have no preemptive or conversion rights. No sales
charge will be imposed in connection with the receipt of such shares by the
shareholders of Arizona Municipal Bond or Florida Municipal Bond.
In connection with the Reorganizations, holders of shares of Arizona Municipal
Bond and Florida Municipal Bond will receive Investor Class shares of Tax-Free
Bond. Shares of Tax-Free Bond to be issued to shareholders of Arizona Municipal
Bond and Florida Municipal Bond under the Plans will be fully paid and
non-assessable when issued, transferable without restriction and will have no
subscription rights. Reference is hereby made to the prospectus of Tax-Free Bond
provided herewith for additional information about shares of Tax-Free Bond.
The Plans contain customary representations, warranties and conditions. Each
Plan provides that the consummation of the Reorganizations with respect to
Arizona Municipal Bond and Florida Municipal Bond and Tax-Free Bond are
conditioned upon, among other things: (i) approval of the Reorganizations by the
shareholders of Arizona Municipal Bond and Florida Municipal Bond; and (ii) the
receipt by Arizona Municipal Bond, Florida Municipal Bond and Tax-Free Bond Fund
of a tax opinion to the effect that the Reorganizations will be tax-free to
Arizona Municipal Bond and Florida Municipal Bond and their respective
shareholders, and Tax-Free Bond. Any Plan may be terminated if, before the
Closing Date, any of the required conditions have not been met, the
representations and warranties are not true (and have not been cured within 30
days), or the Municipal Trust Board determines that a Reorganization is not in
the best interest of the shareholders of Arizona Municipal Bond, Florida
Municipal Bond or Tax-Free Bond, respectively. The Reorganizations are not
anticipated to result in dilution of the net asset value of Arizona Municipal
Bond, Florida Municipal Bond or Tax-Free Bond immediately following their
consummation. Consummation of one of the Reorganizations is not a condition to
the closing of the other Reorganization.
COSTS OF THE REORGANIZATIONS
The expenses of each Reorganization will be paid by American Century.
Reorganization expenses include: (a) expenses associated with the preparation
and filing of this Proxy Statement/Prospectus; (b) postage; (c) printing; (d)
accounting fees; (e) legal fees incurred in the preparation of the Proxy
Statement/Prospectus; (f) solicitation costs; and (g) other related
administrative or operational costs. Any registration or licensing fee will be
borne by the American Century Fund incurring such fee. Arizona Municipal Bond
and Florida Municipal Bond will pay for any brokerage charges associated with
the disposition of their respective portfolio securities prior to the
Reorganizations.
REASONS FOR THE REORGANIZATIONS
In determining to approve the Reorganizations and to recommend approval of the
Reorganizations to shareholders of Arizona Municipal Bond and Florida Municipal
Bond, the Municipal Trust Board made inquiries into all matters deemed relevant
and considered the following, among others items:
o The viability of Arizona Municipal Bond and Florida Municipal Bond
absent approval of the proposed Reorganizations;
o The redundancy of Florida Municipal Bond with Tax-Free Bond given the
repeal of the Florida intangibles tax;
o The commonalities in investment objectives and principal investment
policies of Tax-Free Bond and Arizona Municipal Bond and Florida
Municipal Bond;
o The federal income tax treatment of the Reorganizations;
o The undertaking by American Century to pay all the above-referenced
costs and expenses of the Reorganizations;
o The same portfolio managers are responsible for the Acquired Funds and
Tax-Free Bond.
Some of these factors are discussed in greater detail below.
COMPATIBLE INVESTMENT OBJECTIVES AND POLICIES
As discussed in the section entitled "SUMMARY-Comparison of Investment
Objectives and Policies," there are material differences between the investment
objectives of Arizona Municipal Bond and Florida Municipal Bond and that of
Tax-Free Bond. However, the Municipal Trust Board considered that all three of
the investment objectives seek to provide high current income that is exempt
from federal income tax.
VIABILITY OF THE FUNDS
The Municipal Trust Board considered the decline of net assets and of net
sales of the Acquired Funds over the past several calendar years and concluded
that these Funds were not likely to reach a viable asset size. In addition the
Board considered the negative impact that the repeal of the Florida intangibles
tax would likely have on future sales of Florida Municipal Bond.
FEDERAL INCOME TAX TREATMENT OF REORGANIZATIONS
The Municipal Trust Board also considered that the Acquired Funds will
receive a tax opinion to the effect that the Reorganizations will be treated as
"tax-free" for federal income tax purposes. Prior to the Reorganizations, if a
Arizona Municipal Bond or Florida Municipal Bond shareholder were to redeem its
investment in Arizona Municipal Bond or Florida Municipal Bond and invest the
proceeds in another fund or other investment product, such shareholder generally
would recognize gain or loss for federal income tax purposes upon the redemption
of the shares. By contrast, it is intended that, as a result of the
Reorganizations: (i) shareholders of the Acquired Funds will not recognize a
taxable gain or loss on the exchange of their Arizona Municipal Bond or Florida
Municipal Bond shares for shares of Tax-Free Bond; (ii) shareholders of the
Acquired Funds will have the same aggregate tax cost basis in Tax-Free Bond
shares received in connection with the Reorganizations as in their Arizona
Municipal Bond or Florida Municipal Bond shares; and (iii) assuming that Arizona
Municipal Bond and Florida Municipal Bond shares are held as a capital asset on
the Closing Date, the holding period for Tax-Free Bond Fund shares will include
the period for which such shareholder held its Arizona Municipal Bond or Florida
Municipal Bond shares.
EXPENSES OF THE REORGANIZATIONS
American Century, or one or more of its affiliates, will bear the cost of
the Reorganizations, including proxy solicitation and tabulation costs. See
"Costs of the Reorganizations" under "Information About the Reorganizations" for
further information.
RECOMMENDATION IN FAVOR OF APPROVAL OF THE REORGANIZATIONS
Based on the foregoing, together with other factors and information
considered to be relevant, and recognizing that there can be no assurance that
any benefits will in fact be realized, the Municipal Trust Board concluded that
the Reorganizations are in the best interests of all affected shareholders.
In approving the Reorganizations, the Municipal Trust Board, including all
of the Trustees who are not "interested persons" within the meaning of Section
2(a)(19) of the 1940 Act ("Independent Trustees"), determined that each
Reorganization is in the best interests of Arizona Municipal Bond and Florida
Municipal Bond, respectively, and their respective shareholders. In addition,
the Municipal Trust Board, including all of the Independent Trustees, also
determined that the interests of the shareholders of Arizona Municipal Bond and
Florida Municipal Bond would not be diluted as a result of effecting each
respective Reorganization because each such shareholder will receive
corresponding shares of Tax-Free Bond having an aggregate net asset value equal
to the aggregate net asset value of his or her shares in Arizona Municipal Bond
and Florida Municipal Bond, respectively, outstanding as determined at the
Closing. Consequently, the Municipal Trust Board approved the Reorganizations
and directed that they be submitted to the shareholders of each of Arizona
Municipal Bond and Florida Municipal Bond, respectively for approval.
THE MUNICIPAL TRUST BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF
ARIZONA MUNICIPAL BOND AND FLORIDA MUNICIPAL BOND APPROVE THE CORRESPONDING
PLANS OF REORGANIZATION. CONSUMMATION OF THE REORGANIZATIONS WITH RESPECT TO ONE
FUND IS NOT CONTINGENT UPON THE APPROVAL OF THE PLAN OF REORGANIZATION BY
SHAREHOLDERS OF THE OTHER FUND.
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS
As a condition to the Reorganizations, Arizona Municipal Bond, Florida
Municipal Bond and Tax-Free Bond will receive opinions of counsel to the effect
that, on the basis of the existing provisions of the Code, current
administrative rules and court decisions, for federal income tax purposes:
o the Reorganizations as set forth in the Plans will each constitute a
tax-free reorganization under section 368(a) of the Code, and the
parties to the Plans each will be a "party to a reorganization" within
the meaning of section 368(b) of the Code;
o no gain or loss will be recognized by Tax-Free Bond upon its receipt
of the assets of Arizona Municipal Bond or Florida Municipal Bond in
exchange for Investor Class shares of Tax-Free Bond;
o no gain or loss will be recognized by Arizona Municipal Bond upon
transfer of its assets to Tax-Free Bond in exchange for Investor Class
shares of Tax-Free Bond or upon the distribution of Investor Class
shares of Tax-Free Bond Fund to Arizona Municipal Bond's shareholders
in exchange for their shares of Arizona Municipal Bond;
o no gain or loss will be recognized by Florida Municipal Bond upon
transfer of its assets to Tax-Free Bond in exchange for Investor Class
shares of Tax-Free Bond or upon the distribution of Investor Class
shares of Tax-Free Bond to Florida Municipal Bond's shareholders in
exchange for their shares of the Florida Municipal Bond;
o no gain or loss will be recognized by shareholders of Arizona
Municipal Bond or Florida Municipal Bond upon exchange of their shares
for Investor Class shares of Tax-Free Bond;
o the aggregate tax basis of Investor Class shares of Tax-Free Bond
received by each shareholder of Arizona Municipal Bond and Florida
Municipal Bond, respectively, pursuant to the Reorganizations will be
the same as the aggregate tax basis of the shares of Arizona Municipal
Bond and Florida Municipal Bond, respectively, held by such
shareholder immediately prior to the Reorganizations;
o the holding period of the Investor Class shares of Tax-Free Bond
received by each shareholder of Arizona Municipal Bond and Florida
Municipal Bond pursuant to the Plans will include the period during
which shares of Arizona Municipal Bond and Florida Municipal Bond
exchanged therefore were held by such shareholder, provided the shares
of Arizona Municipal Bond and Florida Municipal Bond were held as
capital assets on the date of the Reorganizations;
o the tax basis of the assets of Arizona Municipal Bond and Florida
Municipal Bond acquired by Tax-Free Bond will be the same as the tax
basis of such assets to Arizona Municipal Bond and Florida Municipal
Bond immediately prior to the Reorganizations; and
o the holding period of Arizona Municipal Bond and Florida Municipal
Bond's assets in the hands of the Tax- Free Bond will include the
period during which those assets were held by Arizona Municipal Bond
and Florida Municipal Bond.
The foregoing opinion may state that no opinion is expressed as to the
effect of the Reorganizations on Arizona Municipal Bond, Florida Municipal Bond
or Tax-Free Bond's shareholders with respect to any asset as to which unrealized
gain or loss is required to be recognized for federal income tax purposes at the
end of a taxable year (or on the termination or transfer thereof) under a
mark-to-market system of accounting.
The parties have agreed to cooperate to facilitate the orderly
reorganization of Arizona Municipal Bond and Florida Municipal Bond into
Tax-Free Bond. It is anticipated that this transition will include the sale of
certain portfolio securities of Arizona Municipal Bond and Florida Municipal
Bond prior to the Reorganizations. The sale of securities may result in the
realization of capital gains to Arizona Municipal Bond and Florida Municipal
Bond that, to the extent not offset by capital losses, would be distributed to
shareholders prior to the Closing Date.
Arizona Municipal Bond, Florida Municipal Bond and Tax-Free Bond had the
following tax basis appreciation or (depreciation) as of May 31, 2006.
FUND NET TAX BASIS
APPRECIATION OR
(DEPRECIATION)
Arizona Municipal $ 1,457,939
Bond Fund
Florida Municipal Bond $ 1,269,966
Fund
Tax-Free Bond Fund $10,923,265
Shareholders are urged to consult their tax advisors regarding the effect of the
Reorganizations in light of their individual circumstances. As the foregoing
relates only to federal income tax consequences, shareholders also should
consult their tax advisors as to the non-United States, state, local and other
tax consequences of the Reorganizations.
FUND CAPITALIZATION
The following table sets forth the capitalization of Arizona Municipal Bond and
Florida Municipal Bond as of January 31, 2007, and the capitalization of
Tax-Free Bond on a pro forma basis, as if the Reorganizations had occurred on
that date.
- -------------------------- -------------------------------------------------- -------------- ------------
ARIZONA MUNICIPAL BOND TAX-FREE BOND PRO FORMA
COMBINING
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
ARIZONA INVESTOR A CLASS B CLASS C CLASS INVESTOR INVESTOR
MUNICIPAL/TAX-FREE BOND
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
TOTAL NET ASSETS $52,298,280 $1,755,833 $42,273 $504,123 $645,085,129 $699,685,638
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
SHARES OUTSTANDING 4,875,057 163,672 3,940 46,993 60,103,323 65,192,985
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
NET ASSET VALUE PER SHARE $10.73 $10.73 $10.73 $10.73 $10.73 $10.73
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
FLORIDA MUNICIPAL BOND TAX-FREE BOND PRO FORMA
COMBINING
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
FLORIDA INVESTOR INSTITUTIONAL ADVISOR C CLASS INVESTOR INVESTOR
MUNICIPAL/TAX-FREE BOND
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
TOTAL NET ASSETS $35,836,522 $1,054,194 $16,082 $1,083,054 $645,085,129 $683,074,981
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
SHARES OUTSTANDING 3,384,334 99,556 1,519 102,281 60,103,323 63,643,850
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
NET ASSET VALUE PER SHARE $10.59 $10.59 $10.59 $10.59 $10.73 $10.73
- -------------------------- ------------- ------------- ---------- ----------- -------------- ------------
- ----------------------------- --------------------------------------------------
ARIZONA MUNICIPAL BOND
- ----------------------------- ------------- ------------ ---------- ------------
INVESTOR A B C
- ----------------------------- ------------- ------------ ---------- ------------
TOTAL NET ASSETS $52,298,280 $1,755,833 $42,273 $504,123
- ----------------------------- ------------- ------------ ---------- ------------
SHARES OUTSTANDING 4,875,057 163,672 3,940 46,993
- ----------------------------- ------------- ------------ ---------- ------------
NET ASSET VALUE PER SHARE $10.73 $10.73 $10.73 $10.73
- ----------------------------- ------------- ------------ ---------- ------------
- ----------------------------- --------------------------------------------------
FLORIDA MUNICIPAL BOND
- ----------------------------- ------------- ------------ ----------- -----------
INVESTOR A B C
- ----------------------------- ------------- ------------ ----------- -----------
TOTAL NET ASSETS $35,836,522 $1,054,194 $16,082 $1,083,054
- ----------------------------- ------------- ------------ ----------- -----------
SHARES OUTSTANDING 3,384,334 99,556 1,519 102,281
- ----------------------------- ------------- ------------ ----------- -----------
NET ASSET VALUE PER SHARE $10.59 $10.59 $10.59 $10.59
- ----------------------------- ------------- ------------ ----------- -----------
- ----------------------------- -------------- --------------
TAX-FREE BOND PRO FORMA
COMBINING
- ----------------------------- -------------- --------------
ARIZONA MUNICIPAL/FLORIDA INVESTOR INVESTOR
MUNICIPAL/TAX-FREE BOND
- ----------------------------- -------------- --------------
TOTAL NET ASSETS $645,085,129 $737,675,490
- ----------------------------- -------------- --------------
SHARES OUTSTANDING 60,103,323 68,733,512
- ----------------------------- -------------- --------------
NET ASSET VALUE PER SHARE $10.73 $10.73
- ----------------------------- -------------- --------------
- ----------------------------- -------------- --------------
MATERIAL DIFFERENCES BETWEEN RIGHTS OF SHAREHOLDERS
Arizona Municipal Bond, Florida Municipal Bond and Tax-Free Bond are all series
of American Century Municipal Trust, a Massachusetts business trust organized on
May 1, 1984. Therefore, since all the Funds are series of the same business
trust there are no material differences regarding the rights of shareholders of
the Funds under applicable state law or the Amended and Restated Agreement and
Declaration of Trust and Bylaws of American Century Municipal Trust.
INFORMATION ABOUT THE RECLASSIFICATIONS
TERMS OF THE RECLASSIFICATIONS
If shareholders of Tax-Free Bond and Utilities approve the proposed
Reclassification (the "Investor Class Reclassification"), all of the Advisor
Class shares of each Fund will be reclassified as Investor Class shares of the
same Funds.
If the Investor Class Reclassification is approved by shareholders, it is
anticipated that it will be effective on the Closing Date. A form of amendment
to the Articles of Incorporation of American Century Quantitative Equity Funds,
Inc. is attached hereto as Exhibit B.
COSTS OF THE RECLASSIFICATIONS
The expenses of the Reclassifications will be paid by American Century.
Reclassification expenses include: (a) expenses associated with the preparation
and filing of this Proxy Statement/Prospectus; (b) postage; (c) printing; (d)
accounting fees; (e) legal fees incurred in the preparation of the Proxy
Statement/Prospectus; (f) solicitation costs; and (g) other related
administrative or operational costs. Any registration or licensing fee will be
borne by the American Century Fund incurring such fee.
REASONS FOR THE RECLASSIFICATIONS
AMERICAN CENTURY MUNICIPAL TRUST
At its meeting on December 8, 2006, the Board of Trustees of American Century
Municipal Trust authorized, approved and declared it advisable to amend the
Trust's Amended and Restated Agreement and Declaration of Trust to reflect a
reclassification of all Advisor Class shares of Tax-Free Bond as Investor Class
shares of the same Fund in an effort to eliminate share classes that are not in
demand. The Board proposes to reclassify all Advisor Class shares of the Fund as
Investor Class shares in an effort to simplify and standardize share class
structure the distribution of the Fund. The Board considered the low balance in
the Advisor Class, and concluded that the Reclassification of the Advisor Class
shares of Tax-Free Bond as Investor Class shares of the same Fund will result in
a beneficial decrease in the total expense ratio for affected shareholders.
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.
At its meeting on December 8, 2006, the Board of Directors of American Century
Quantitative Equity Funds, Inc. authorized, approved and declared it advisable
to amend the Articles of Incorporation to reflect a reclassification of all
Advisor Class shares of Utilities as Investor Class shares of the same Fund in
an effort to eliminate share classes that are not in demand. The Board proposes
to reclassify all Advisor Class shares of the Fund as Investor Class shares in
an effort to simplify and standardize the share class structure of the Fund. The
Board considered the low balance of the Advisor Class and concluded that the
Reclassification of all Advisor Class shares as Investor Class shares of the
same Fund will result in a beneficial decrease in the total expense ratio for
affected shareholders.
FEDERAL INCOME TAX CONSEQUENCES
Based on the existing provisions of the Internal Revenue Code of 1986, as
amended, current administrative rules and court decisions, for federal income
tax purposes, it is expected that the Reclassifications of the American Century
Funds will not result in any tax consequences to shareholders of the affected
Funds.
DESCRIPTION OF THE FUND SHARES
TAX-FREE BOND AND UTILITIES SHARES
Advisor Class shares are intended for persons investing through financial
intermediaries that provide various administrative and distribution services.
Financial intermediaries include banks, broker-dealers, insurance companies and
financial professionals. Shares of Tax-Free Bond are not available to investors
in employer-sponsored retirement plans. Investor Class shares are available
through financial intermediaries that provide various administrative services,
but also may be purchased directly from American Century. Neither Investor Class
nor Advisor Class shares impose a front-end or contingent deferred sales charge.
Tax-Free Bond and Utilities do not charge sales loads, fees or other charges if
you buy shares directly from American Century, reinvest dividends in additional
shares, exchange shares into the same class of shares of another American
Century Fund, or redeem shares. There is a $10 service charge for redeeming
shares by wire.
Investors holding shares in the Investor Class in an American Century account
(i.e., not a financial intermediary or retirement plan account) may be subject
to a $25 account maintenance fee if their total eligible investments with
American Century are less than $10,000. American Century will determine the
amount of the total eligible investments twice per year, generally the last
Friday in October and April. If the value of those eligible investments is less
than $10,000 at that time, American Century will automatically redeem shares in
one of the accounts in order to collect the $12.50 semiannual fee. Please note
that tax liability may be incurred as a result of this redemption. In
determining the total eligible investment amount, American Century will include
investments in all personal accounts (including American Century Brokerage
accounts) registered under the investor's Social Security number. The fee will
not be charged to investors who choose to manage their accounts exclusively
online.
RIGHTS OF SHAREHOLDERS OF TAX-FREE BOND AND UTILITIES
Tax-Free Bond is a series of American Century Municipal Trust, a Massachusetts
business trust. Since Advisor Class shares and Investor Class shares of Tax-Free
Bond both represent an interest in American Century Municipal Trust, there are
no material differences in the rights of shareholders of the Advisor Class
compared to the rights of shareholders of the Investor Class under applicable
state law or the Amended and Restated Agreement and Declaration of Trust and
Bylaws of American Century Municipal Trust. Nevertheless, the following is a
brief discussion providing information with respect to the rights of
shareholders under the Amended and Restated Agreement and Declaration of Trust
of American Century Municipal Trust (the "Municipal Charter"). The description
is qualified in its entirety by reference to the Amended and Restated Agreement
and Declaration of Trust dated March 26, 2004, the form of Amendment to the
Amended and Restated Declaration of Trust, and the Amended and Restated Bylaws
dated August 26, 2004.
Utilities is a series of American Century Quantitative Equity Funds, Inc., a
Maryland corporation. Since Advisor Class shares and Investor Class shares of
Utilities both represent an interest in American Century Quantitative Equity
Funds, Inc., there are no material differences in the rights of shareholders of
the Advisor Class compared to the rights of shareholders of the Investor Class
under applicable state law or the Articles of Incorporation and Bylaws of
American Century Quantitative Equity Funds, Inc. Nevertheless, the following is
a brief discussion providing information with respect to the rights of
shareholders under Maryland law and the Articles of Incorporation of American
Century Quantitative Equity Funds, Inc. (the "Equity Charter"). The description
is qualified in its entirety by reference to the Articles of Incorporation as
last amended November 10, 2006 and the Amended and Restated Bylaws dated August
26, 2004.
VOTING RIGHTS OF SHAREHOLDERS
The Municipal Charter provides that a shareholder of each Fund or class shall be
entitled to one vote for each dollar of net asset value per share of such Fund
or class, on any matter on which such shareholder is entitled to vote. Each
fractional dollar amount shall be entitled to a proportionate fractional vote.
The Municipal Charter provides that shareholders are entitled to vote only 1)
for the election of Trustees; 2) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders; 3) with respect
to the termination of the Trust or any Fund or class of the Trust; and 4) with
respect to such additional matters relating to the Trust as may be required by
the Municipal Charter, the Bylaws of the Trust, or as deemed necessary or
desirable by the Trustees. There is no cumulative voting in the election of
Trustees.
The Equity Charter provides that a shareholder shall be entitled to one vote for
each dollar of net asset value per share for each share of stock held on the
applicable record date, regardless of the class or series. However, matters
affecting only one class or Fund or class shall be voted upon only by that Fund
or class. Where required by the 1940 Act or the regulations adopted thereunder
or any other applicable law, certain matters shall be voted on separately by
each class or series of shares affected and not by all classes unless otherwise
required by law.
MEETINGS OF SHAREHOLDERS
The Municipal Charter and Equity Charter do not require the Funds to hold annual
shareholder meetings, unless required to do so in order to elect trustees and
such other purposes as may be prescribed by law or the Municipal or Equity
Charters. The Municipal and Equity Charters stipulate that special meetings of
the shareholders may be called by the Trustees/Directors for the purpose of
taking action upon any other matter deemed by the Trustees/Directors to be
necessary or desirable. A meeting of the shareholders may be held at any place
designated by the Trustees/Directors. Written notice of any meeting is required
to be given by the Trustees/Directors. Except when a larger quorum is required
by applicable law, one-third of the shares entitled to vote shall constitute a
quorum at a shareholder's meeting. When any one or more Funds or classes of the
trust or corporation is to vote as a single Fund or class separate from any
other shares which are to vote on the same matters as a separate Fund or class,
one-third of the shares of each such Fund or class entitled to vote shall
constitute a quorum at a shareholders' meeting of that Fund or class. Any
meeting of shareholders may be adjourned from time to time by a majority of the
votes properly cast upon the question, whether or not a quorum is present. A
meeting may be adjourned without additional notice, other than announcement at
the meeting, for up to 60 days in the case of American Century Municipal Trust
and up to 90 days in the case of American Century Quantitative Equity Funds,
Inc.
FUND CAPITALIZATION
The following table sets forth the capitalization of the Advisor and Investor
Classes of Tax-Free Bond and Utilities as of January 31, 2007, and the
capitalization of the Investor Class on a pro forma basis, as if the
Reclassifications had occurred on that date.
- -------------------------- --------------- ---------------- --------------------
TAX-FREE BOND ADVISOR CLASS INVESTOR CLASS PRO FORMA COMBINING
INVESTOR CLASS
- -------------------------- --------------- ---------------- --------------------
TOTAL NET ASSETS $335,015 $645,085,129 $645,420,144
- -------------------------- --------------- ---------------- --------------------
SHARES OUTSTANDING 31,214 60,103,323 60,143,537
- -------------------------- --------------- ---------------- --------------------
NET ASSET VALUE PER SHARE $10.73 $10.73 $10.73
- -------------------------- --------------- ---------------- --------------------
- -------------------------- ---------------- --------------- --------------------
UTILITIES ADVISOR CLASS INVESTOR CLASS PRO FORMA COMBINING
INVESTOR CLASS
- -------------------------- ---------------- --------------- --------------------
TOTAL NET ASSETS $5,538,925 $342,943,328 $348,482,253
- -------------------------- ---------------- --------------- --------------------
SHARES OUTSTANDING 336,147 20,786,233 21,121,925
- -------------------------- ---------------- --------------- --------------------
NET ASSET VALUE PER SHARE $16.48 $16.50 $16.50
- -------------------------- ---------------- --------------- --------------------
INFORMATION ABOUT THE AMERICAN CENTURY FUNDS
GENERAL INFORMATION
This Proxy Statement/Prospectus is being furnished in connection with the
solicitation of proxies by the Boards. Proxies may be solicited by officers or
employees of American Century Funds, American Century, their affiliates, as well
as any proxy solicitation firm hired by American Century. Additionally,
financial intermediaries may solicit the votes of the beneficial owners of the
Funds. It is anticipated that the solicitation of proxies will be primarily by
mail, internet, telephone, facsimile or personal interview. Shareholders who
communicate proxies by telephone or by other electronic means have the same
power and authority to issue, revoke or otherwise change their voting
instructions as shareholders submitting proxies in written form. Telephonic
solicitations will follow procedures designed to ensure accuracy and prevent
fraud. American Century or an affiliate thereof may reimburse banks, brokers and
others for their reasonable expenses in forwarding proxy solicitation materials
to beneficial owners of American Century shares, and may reimburse certain
officers or employees that it may employ for their reasonable expenses in
assisting in the solicitation of proxies from such beneficial owners. Such
expenses are currently estimated to be approximately $78,500 in the aggregate.
DATE, TIME AND PLACE OF MEETING
The Meeting will be held on June 27, 2007 at the principal executive offices of
American Century, 4500 Main Street, Kansas City, Missouri 64111 at 11:30 am
Central Time.
USE AND REVOCATION OF PROXIES
A shareholder executing and returning a proxy has the power to revoke it at any
time prior to its exercise by executing a superseding proxy (i.e., a later-dated
and signed proxy), by submitting a notice of revocation to the Corporate
Secretary of the American Century Funds or by subsequently registering his or
her vote by telephone or over the Internet. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder of record
present at the Meeting may withdraw his or her proxy and vote in person. All
shares represented by properly executed proxies received at or prior to the
Meeting, unless such proxies previously have been revoked, will be voted at the
Meeting in accordance with the directions on the proxies; if no direction is
indicated on a properly executed proxy, such shares will be voted "FOR" the
Reorganizations and the Reclassifications. It is not anticipated that any
matters other than the approval of the Reorganizations and the Reclassifications
will be brought before the Meeting. If, however, any other business properly is
brought before the Meeting, proxies will be voted in accordance with the
judgment of the persons designated on such proxies.
VOTING RIGHTS AND REQUIRED VOTES
A quorum of shareholders is necessary to hold a valid meeting. Shareholders
entitled to vote one-third of the issued and outstanding shares of each American
Century Fund or class must be present in person or by proxy, to constitute a
quorum for purposes of voting on proposals relating to that Fund or class. Each
shareholder is entitled to one vote per dollar of NAV represented by their
shares, with fractional dollars voting proportionally. Shareholders of each
affected Fund or class vote separately on whether to approve the Reorganization
and Reclassification, and the consummation of any one Reorganization or
Reclassification is not a condition for approving any other Reorganization or
Reclassification. Approval of the Reorganizations and Reclassifications
affecting Arizona Municipal Bond, Florida Municipal Bond and Tax-Free Bond by
the affected classes or Funds requires the approval of the lesser of (i) more
than 50% of the outstanding shares of the applicable Fund or class or (ii) 67%
or more of the shares of that Fund or Class present or represented by proxy at
the Meeting if more than 50% of such shares are present or represented by proxy.
Approval of the Reclassification affecting the Advisor Class of Utilities
requires the approval of the majority of the aggregate number of votes entitled
to be cast thereon. Broker-dealer firms or other financial intermediaries
holding shares of any of the Funds in "street name" for the benefit of their
customers and clients will request the instructions of such customers and
clients on how to vote their shares before the Meeting. Each Fund will include
shares held of record by broker-dealers as to which such authority has been
granted in its tabulation of the total number of shares present for purposes of
determining whether the necessary quorum of shareholder exists. Properly
executed proxies that are returned but that are marked "abstain" or with respect
to which a broker-dealer has declined to vote on any proposal ("broker
non-votes") will be counted as present for the purposes of determining a quorum.
Abstention and broker non-votes (if applicable) will have the same effect as a
vote against a proposal. If, by the time scheduled for the Meeting, sufficient
votes in favor of approval of a proposal have not been received from the
shareholders of the applicable Fund or class, the persons named as proxies may
propose one or more adjournments of such Meeting, without further notice, to
permit further solicitation of proxies from shareholders. According to the
Bylaws of the Funds, any meeting at which a quorum is not present can be
adjourned by a majority of the voting stock represented in person or by proxy
until a quorum shall be present or represented. A meeting may be adjourned
without additional notice, other than announcement at the meeting, for up to 60
days in the case of American Century Municipal Trust and for up to 90 days in
the case of American Century Quantitative Equity Funds, Inc.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of shares of the Funds at the close of business on April
13, 2007 (the "Record Date") are entitled to vote at the Meeting or any
adjournment thereof. The following chart sets forth the number of shares of each
class of the Funds issued and outstanding and the number of votes entitled to
vote at the close of business on March 15, 2007.
- ----------------------- ----------------- ------------------ ------------------
Number of Votes
Entitled to Vote
Fund Name Share Class Outstanding Shares ($1 equals 1 vote)
- ----------------------- ----------------- ------------------ -------------------
Arizona Municipal Bond Investor Class 4,798,298.41 51,821,622.78
- ----------------------- ----------------- ------------------ -------------------
A Class 208,605.01 2,252,934.15
- ----------------------- ----------------- ------------------ -------------------
B Class 3,941.56 42,568.05
- ----------------------- ----------------- ------------------ -------------------
C Class 50,663.32 547,163.87
- ----------------------- ----------------- ------------------ -------------------
Florida Municipal Bond Investor Class 3,717,442.54 34,869,611.06
- ----------------------- ----------------- ------------------ -------------------
A Class 89,365.62 952,637.49
- ----------------------- ----------------- ------------------ -------------------
B Class 1,510.44 16,101.29
- ----------------------- ----------------- ------------------ -------------------
C Class 102,346.77 1,091,016.54
- ----------------------- ----------------- ------------------ -------------------
Tax-Free Bond Advisor Class 33,641.67 363,666.45
- ----------------------- ----------------- ------------------ -------------------
Utilities Advisor Class 343,861.28 5,814,693.69
- ----------------------- ----------------- ------------------ -------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE FUNDS
At the close of business on March 15, 2007, the following persons owned, to the
knowledge of management, 5% or more of the outstanding shares of the funds.
PERCENTAGE OF PERCENTAGE OF
PERCENTAGE OF OUTSTANDING SHARES OUTSTANDING SHARES
OUTSTANDING OWNED POST OWNED POST
SHARES OWNED REORGANIZATION ON REORGANIZATION ON
SHAREHOLDER OF RECORD A PRO FORMA BASIS(1) A PRO FORMA BASIS(2)
- --------------------------------------------------------------------------------------------------------------
Arizona Municipal Bond
- --------------------------------------------------------------------------------------------------------------
Investor Class
Charles Schwab & Co., Inc. 28% 2% 2%
San Francisco, California
- --------------------------------------------------------------------------------------------------------------
A Class
Charles Schwab & Co., Inc. 45% 0% 0%
San Francisco, California
American Enterprise Investment Svcs 32% 0% 0%
Minneapolis, Minnesota
LPL Financial Services 15% 0% 0%
San Diego, California
MLPF&S, Inc. 7% 0% 0%
Jacksonville, Florida
- --------------------------------------------------------------------------------------------------------------
B Class
First Clearing LLC 94% 0% 0%
Phyllis Bruner Turell Trust
Phyllis Bruner Turell TTEE
Glen Allen, Virginia
American Century Investment Management, 6% 0% 0%
Inc.
Kansas City, Missouri
- --------------------------------------------------------------------------------------------------------------
C Class
MLPF&S, Inc. 76% 0% 0%
Jacksonville, Florida
Raymond James & Assoc. Inc. 11% 0% 0%
FBO FOGDE, F TR
St. Petersburg, Florida
American Enterprise Investment Svcs 10% 0% 0%
Minneapolis, Minnesota
- --------------------------------------------------------------------------------------------------------------
Florida Municipal Bond
- --------------------------------------------------------------------------------------------------------------
Investor Class
Charles Schwab & Co., Inc. 26% 1% 1%
San Francisco, California
Phyllis S. Gunton and WE Gunton TR 8% 0% 0%
PS Gunton Trust
Naples, Florida
Elmer L. Coombs Tr.
Elmer L. Coombs Trust
Weirsdale, Florida 5% 0% 0%
- --------------------------------------------------------------------------------------------------------------
PERCENTAGE OF PERCENTAGE OF
PERCENTAGE OF OUTSTANDING SHARES OUTSTANDING SHARES
OUTSTANDING OWNED POST OWNED POST
SHARES OWNED REORGANIZATION ON REORGANIZATION ON
SHAREHOLDER OF RECORD A PRO FORMA BASIS(1) A PRO FORMA BASIS(2)
- --------------------------------------------------------------------------------------------------------------
Florida Municipal Bond
- --------------------------------------------------------------------------------------------------------------
A Class
Charles Schwab & Co., Inc. 71% 0% 0%
San Francisco, California
American Enterprise Investment Svcs 10% 0% 0%
Minneapolis, Minnesota
MLPF&S, Inc. 7% 0% 0%
Jacksonville, Florida
Raymond James & Assoc. 5% 0% 0%
FBO Smith Stuart
St. Petersburg, Florida
- --------------------------------------------------------------------------------------------------------------
B Class
American Enterprise Investment Svcs 39% 0% 0%
Minneapolis, Minnesota
American Enterprise Investment Svcs 32% 0% 0%
Minneapolis, Minnesota
American Century Investment 16% 0% 0%
Management, Inc.
Kansas City, Missouri
Wells Fargo Investments LLC 6% 0% 0%
Minneapolis, Minnesota
- --------------------------------------------------------------------------------------------------------------
C Class
MLPF&S, Inc. 95% 0% 0%
Jacksonville, Florida
- --------------------------------------------------------------------------------------------------------------
Tax-Free Bond
- --------------------------------------------------------------------------------------------------------------
Investor Class
Charles Schwab & Co., Inc. 34% 34% 30%
San Francisco, California
National Financial Services Corp. 11% 11% 10%
New York, New York
- --------------------------------------------------------------------------------------------------------------
Advisor Class
National Financial Services Corp 65% 0% 0%
New York, New York
Tri-State Land Co Inc. 28% 0% 0%
Pittsburgh, Pennsylvania
American Century Investment 7% 0% 0%
Management, Inc.
Kansas City, Missouri
- --------------------------------------------------------------------------------------------------------------
PERCENTAGE OF
PERCENTAGE OF OUTSTANDING SHARES
OUTSTANDING OWNED POST
SHARES OWNED REORGANIZATION ON
SHAREHOLDER OF RECORD A PRO FORMA BASIS
- --------------------------------------------------------------------------------
Utilities
- --------------------------------------------------------------------------------
Advisor Class
Charles Schwab & Co. Inc. 80% 1%(3)
San Francisco, California
- --------------------------------------------------------------------------------
Investor Class
Charles Schwab & Co. Inc. 22% 21%
San Francisco, California
National Financial Services Corp 5% 5%
New York, New York
- --------------------------------------------------------------------------------
(1) PERCENTAGE BASED ON REORGANIZATION INTO TAX-FREE BOND INVESTOR CLASS
(2) PERCENTAGE BASED ON REORGANIZATION OF ALL CLASSES OF ARIZONA MUNICIPAL BOND
AND FLORIDA MUNICIPAL BOND INTO TAX-FREE BOND INVESTOR CLASS
(3) PERCENTAGE BASED ON REORGANIZATION INTO UTILITIES INVESTOR CLASS
The Funds are unaware of any other shareholders, beneficial or of record, who
own more than 5% of any class of a Fund's outstanding shares. Charles Schwab
& Co., Inc. owns 27% of American Century Municipal Trust. A shareholder
owning of record or beneficially more than 25% of the Corporation's outstanding
shares may be considered a controlling person. The vote of any such person could
have a more significant effect on matters presented at a shareholder's meeting
than votes of other shareholders. The Funds are unaware of any other
shareholders, beneficial or of record, who own more than 25% of the voting
securities of a Corporation. As of March 15, 2007, the officers and directors of
the Funds, as a group, owned less than 1% of any Fund's outstanding shares.
OTHER SERVICE PROVIDERS
American Century Services, LLC, 4500 Main Street, Kansas City, Missouri 64111,
an affiliate of American Century, serves as transfer agent of the American
Century Funds. American Century Investment Services, Inc., 4500 Main Street,
Kansas City, Missouri 64111, an affiliate of American Century, serves as
distributor to the American Century Funds.
WHERE TO FIND ADDITIONAL INFORMATION
Additional information about the American Century Funds is included in the
documents listed in the beginning of this Proxy Statement/Prospectus.
The Corporations are subject to the informational requirements of the Securities
Act, the Securities Exchange Act of 1934, and the 1940 Act, and in accordance
therewith file reports and other information with the SEC. Reports, proxy and
information statements, and other information filed by the Corporations, on
behalf of the Funds, can be obtained by calling or writing the Funds and can
also be inspected and copied by the public at the public reference facilities
maintained by the SEC in Washington, DC located at Room 1580, 100 F Street,
N.E., Washington DC 20549 and located at room 1204, Everett McKinley Dirksen
Bldg., 219 South Dearborn Street, Chicago, IL 60604 and 233 Broadway, NY, NY
10007. Copies of such material can be obtained at prescribed rates from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
SEC, Washington DC 20549, or obtained electronically from the EDGAR database on
the SEC's website (www.sec.gov).
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The American Century Funds are not required, and do not intend, to hold regular
annual meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a Proxy Statement/Prospectus for the next meeting
of shareholders should send their written proposals to Corporate Secretary,
American Century Funds, P.O. Box 410141, Kansas City, Missouri, 64141, or by
e-mail to corporatesecretary@americancentury.com so that they are received
within a reasonable time before any such meeting.
No business other than the matters described above is expected to come before
the Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment or postponement of the Meeting, the
persons named on the enclosed proxy card(s) will vote on such matters according
to their best judgment in the interests of the American Century Funds.
- --------------------------------------------------------------------------------
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD(S)
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
SHAREHOLDERS RECEIVING THIS PROXY STATEMENT/PROSPECTUS MAY SIMULTANEOUSLY
RECEIVE A SEPARATE PROXY STATEMENT REGARDING THE ELECTION OF DIRECTORS/TRUSTEES
AND CERTAIN OTHER MATTERS. PLEASE COMPLETE ALL PROXY CARD(S).
- --------------------------------------------------------------------------------
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this [__] day of [_____________], by and between [AMERICAN CENTURY MUNICIPAL
TRUST], a Massachusetts business trust, with its principal place of business at
4500 Main Street, Kansas City, Missouri 64111-0141 (the "Trust"), with respect
to its Tax-Free Bond Fund (the "Acquiring Fund"), and the Trust with respect to
its [______] Fund (the "Acquired Fund" and, collectively with the Acquiring
Fund, the "Funds").
RECITALS
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368 of the United States Internal
Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations
promulgated thereunder. The reorganization will consist of: (i) the transfer of
all of the assets of the Acquired Fund in exchange for Investor Class Shares of
the Acquiring Fund Shares ("Acquiring Fund Shares"); and (ii) the distribution
of the Acquiring Fund shares to the holders of A Class, B Class, C Class and
Investor Class shares of the Acquired Fund and the liquidation of the Acquired
Fund as provided herein, all upon the terms and conditions set forth in this
Agreement (the "Reorganization").
WHEREAS, the Acquired Fund and Acquiring Fund are both separate series of
the Trust, the Trust is an open-end, registered management investment company
and the Acquired Fund owns securities that generally are assets of the character
in which the Acquiring Fund is permitted to invest;
WHEREAS, each of the Acquiring Fund and the Acquired Fund is authorized to
issue its respective shares;
WHEREAS, the Trustees of the Trust have determined that the Reorganization,
with respect to the Acquiring Fund, is in the best interests of the Acquiring
Fund and that the interests of the existing shareholders of the Acquiring Fund
will not be diluted as a result of the Reorganization; and
WHEREAS, the Trustees of the Trust have determined that the Reorganization,
with respect to the Acquired Fund, is in the best interests of the Acquired Fund
and that the interests of the existing shareholders of the Acquired Fund will
not be diluted as a result of the Reorganization.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ACQUIRING FUND
SHARES AND LIQUIDATION OF THE ACQUIRED FUND
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein and
on the basis of the representations and warranties contained herein, the
Acquired Fund agrees to transfer all of its assets, as set forth in paragraph
1.2, to the Acquiring Fund. In exchange, the Acquiring Fund agrees to deliver to
the Acquired Fund the number of full and fractional Acquiring Fund Shares,
determined by dividing the assets of the Acquired Fund, computed in the manner
and as of the time and date set forth in paragraph 2.1, by the net asset value
per share of the Acquiring Fund Shares, computed in the manner and as of the
time and date set forth in paragraph 2.2. Holders of A Class, B Class, C Class
and Investor Class shares of the Acquired Fund will receive Investor Class
shares of the Acquiring Fund. Such transaction shall take place at the closing
on the Closing Date provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be acquired
by the Acquiring Fund shall consist of property having a value equal to the
total net assets of the Acquired Fund, including, without limitation, cash,
securities, commodities, interests in futures and dividends or interest
receivable, owned by the Acquired Fund and any deferred or prepaid expenses
shown as an asset on the books of the Acquired Fund on the Closing Date.
The Acquired Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such statements. The Acquired Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
changes in its financial position as reflected in such financial statements
other than as the result of changes in the market values of securities or
otherwise occurring in the ordinary course of business in connection with the
purchase and sale of securities, the issuance and redemption of Acquired Fund
shares and the payment of normal operating expenses, dividends and capital gains
distributions.
1.3 LIABILITIES TO BE DISCHARGED. The Acquired Fund will discharge all of
its liabilities and obligations prior to the Closing Date other than the
ordinary course liabilities reflected in the Acquired Fund's net asset value
incurred by the Acquired Fund prior to the Closing Date in connection with its
on-going business operations (including accrued fees and expenses and payables
for securities purchased or for shares redeemed) ("Acquired Fund Ordinary Course
Liabilities"). Subject to receiving the requisite approval of the shareholders
of the Acquired Fund, and subject to other terms and conditions contained in
this Agreement and on the basis of the representations and warranties contained
in this Agreement, on the Closing Date, the Acquiring Fund shall assume and
thereafter in due course pay and fully satisfy, discharge or perform the
Acquired Fund Ordinary Course Liabilities. For avoidance of doubt, the Acquiring
Fund shall not assume or agree to pay, satisfy, discharge or perform any
contingent liabilities, or any liabilities arising under any plan adopted by the
Acquired Fund under Rule 12b-1 with respect to the sale of the Acquired Fund's
shares prior to the Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as
is conveniently practicable: (a) the Acquired Fund will distribute in complete
liquidation of the Acquired Fund, pro rata to its shareholders of record,
determined as of the close of business on the Closing Date (the "Acquired Fund
Shareholders"), all of the Acquiring Fund Shares received by the Acquired Fund
pursuant to paragraph 1.1; and (b) the Acquired Fund will thereupon proceed to
dissolve and terminate as set forth in paragraph 1.8 below. Such distribution
will be accomplished by the transfer of Acquiring Fund Shares credited to the
account of the Acquired Fund on the books of the Acquiring Fund to open accounts
on the share records of the Acquiring Fund in the name of the Acquired Fund
Shareholders, and representing the respective pro rata number of Acquiring Fund
Shares due such shareholders. All issued and outstanding shares of the Acquired
Fund (the "Acquired Fund Shares") will simultaneously be canceled on the books
of the Acquired Fund. The Acquiring Fund shall not issue certificates
representing Acquiring Fund Shares in connection with such transfer. After the
Closing Date, the Acquired Fund shall not conduct any business except in
connection with its termination.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown
on the books of the Acquiring Fund's transfer agent. Acquiring Fund Shares will
be issued simultaneously to the Acquired Fund, in an amount equal in value to
the aggregate net asset value of the Acquired Fund Shares, to be distributed to
Acquired Fund Shareholders.
1.6 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Acquired
Fund Shares on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the Acquired
Fund is and shall remain the responsibility of the Acquired Fund.
1.8 TERMINATION. The Acquired Fund shall be terminated promptly following
the Closing Date and the making of all distributions pursuant to paragraph 1.4.
1.9 BOOKS AND RECORDS. All books and records of the Acquired Fund,
including all books and records required to be maintained under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, shall be available to the Acquiring Fund from and after the Closing
Date and shall be turned over to the Acquiring Fund as soon as practicable
following the Closing Date.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets at
the closing on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's Articles of Incorporation, Bylaws and the Acquiring Fund's then
current prospectus and statement of additional information.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring Fund
Shares shall be the net asset value per share computed at the closing on the
Closing Date, using the valuation procedures set forth in the Acquiring Fund's
Articles of Incorporation, Bylaws and the Acquiring Fund's then current
prospectus and statement of additional information.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund's shares to be
issued (including fractional shares, if any) in exchange for the Acquired Fund's
assets, shall be determined as set forth in paragraph 1.1.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
American Century Investment Management, Inc., on behalf of the Acquiring Fund
and the Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about August 31, 2007, or
such other date(s) as the parties may agree to in writing (the "Closing Date").
All acts taking place at the closing shall be deemed to take place at 4:00 p.m.,
Eastern Time, on the Closing Date unless otherwise provided herein. The closing
shall be held at the offices of American Century Investments, 4500 Main Street,
Kansas City, Missouri 64111-0141, or at such other time and/or place as the
parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. The Acquired Fund shall cause JPMorgan Chase
Bank, N.A., as custodian for the Acquired Fund (the "Custodian"), to deliver at
the Closing a certificate of an authorized officer stating that: (a) the
Acquired Fund's portfolio securities, cash, and any other assets have been
delivered in proper form to the Acquiring Fund on the Closing Date; and (b) all
necessary taxes including all applicable federal and state stock transfer
stamps, if any, shall have been paid, or provision for payment shall have been
made, in conjunction with the delivery of portfolio securities by the Acquired
Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the scheduled
Closing Date, either: (a) the New York Stock Exchange ("NYSE") or another
primary exchange on which the portfolio securities of the Acquiring Fund or the
Acquired Fund are purchased or sold, shall be closed to trading or trading on
such exchange shall be restricted; or (b) trading or the reporting of trading on
the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value
of the net assets of the Acquiring Fund or the Acquired Fund is impracticable,
the Closing Date shall be postponed until the first business day after the day
when trading is fully resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. The Acquired Fund shall cause American
Century Services, LLC, as transfer agent for the Acquired Fund as of the Closing
Date, to deliver at the Closing a certificate of an authorized officer stating
that its records contain the names and addresses of Acquired Fund Shareholders,
and the number and percentage ownership of outstanding shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue and
deliver or cause American Century Services, LLC, its transfer agent, to issue
and deliver a confirmation evidencing Acquiring Fund Shares to be credited on
the Closing Date to the Secretary of the Trust or provide evidence satisfactory
to the Acquired Fund that the Acquiring Fund Shares have been credited to the
Acquired Fund's account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills of sale, checks, assignments, share
certificates, receipts, officer's certificates, transfer agent certificates,
custodian certificates, opinions, and other certificates and documents, if any,
as such other party or its counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED FUND. The Trust, on behalf of the
Acquired Fund, represents and warrants to the Trust on behalf of the Acquiring
Fund as follows:
a) The Acquired Fund is a legally designated, separate series of a
business trust duly organized, validly existing and in good standing
under the laws of Massachusetts.
b) The Trust is registered as an open-end management investment company
under the 1940 Act, and the Acquired Fund's registration with the
Securities and Exchange Commission (the "Commission") as an investment
company under the 1940 Act is in full force and effect.
c) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act, and the rules and regulations thereunder, and
do not include any untrue statement of a material fact or omit to
state any material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
d) The Acquired Fund is not in violation of, and the execution, delivery,
and performance of this Agreement (subject to shareholder approval)
will not result in the violation of, any provision of the Trust's
Declaration of Trust or By-Laws or of any material agreement,
indenture, instrument, contract, lease, or other undertaking to which
the Acquired Fund is a party or by which it is bound.
e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement) that will be terminated with liability to
it before the Closing Date, except for liabilities, if any, to be
discharged as provided in paragraph 1.3 hereof.
f) No litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquired Fund or any of its
properties or assets, which, if adversely determined, would materially
and adversely affect its financial condition, the conduct of its
business, or the ability of the Acquired Fund to carry out the
transactions contemplated by this Agreement. The Acquired Fund knows
of no facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that
materially and adversely affects its business or its ability to
consummate the transactions contemplated herein.
g) The financial statements of the Acquired Fund as of May 31, 2006, and
for the fiscal year then ended, have been prepared in accordance with
generally accepted accounting principles, and audited by
PricewaterhouseCoopers LLP, independent registered public accounting
firm, and such statements (copies of which have been furnished to the
Acquiring Fund) fairly and accurately reflect the financial condition
of the Acquired Fund as of such date, and there are no known
contingent liabilities of the Acquired Fund as of such date that are
not disclosed in such statements.
h) The unaudited financial statements of the Acquired Fund as of November
30, 2006, and for the six months then ended, have been prepared in
accordance with generally accepted accounting principles, and such
statements (copies of which have been furnished to the Acquiring Fund)
fairly and accurately reflect the financial condition of the Acquired
Fund as of such date, and there are no known contingent liabilities of
the Acquired Fund as of such date that are not disclosed in such
statements.
i) Since the date of the financial statements referred to in subparagraph
(h) above, there have been no material adverse changes in the Acquired
Fund's financial condition, assets, liabilities or business (other
than changes occurring in the ordinary course of business), or any
incurrence by the Acquired Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as
identified and disclosed by the Acquired Fund on SCHEDULE 4.1 to this
Agreement. For the purposes of this subparagraph (i), a decline in the
net asset value of the Acquired Fund in and of itself shall not
constitute a material adverse change.
j) All federal and other tax returns and reports of the Acquired Fund
required by law to be filed, have been timely and accurately filed,
and all federal and other taxes shown due on such returns and reports
have been paid, or provision shall have been made for the payment
thereof. To the best of the Acquired Fund's knowledge, no such return
is currently under audit, and no assessment has been asserted with
respect to such returns.
k) All issued and outstanding Acquired Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquired
Fund. All of the issued and outstanding Acquired Fund Shares will, at
the time of the Closing Date, be held by the persons and in the
amounts set forth in the records of the Acquired Fund's transfer agent
as provided in paragraph 3.4. The Acquired Fund has no outstanding
options, warrants, or other rights to subscribe for or purchase any of
the Acquired Fund Shares, and has no outstanding securities
convertible into any of the Acquired Fund Shares.
l) At the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2, and full right, power, and authority
to sell, assign, transfer, and deliver such assets hereunder, free of
any lien or other encumbrance, except those liens or encumbrances of
which the Acquiring Fund has received notice, and, upon delivery and
payment for such assets, and the filing of any articles, certificates
or other documents under the laws of Massachusetts, the Acquiring Fund
will acquire good and marketable title, subject to no restrictions on
the full transfer of such assets, other than such restrictions as
might arise under the 1933 Act or the 1940 Act, and other than as
disclosed to and accepted by the Acquiring Fund.
m) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquired
Fund and its Board of Trustees. Subject to approval by the Acquired
Fund Shareholders, this Agreement constitutes a valid and binding
obligation of the Acquired Fund, enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting
creditors' rights and to general equity principles.
n) The information to be furnished by the Acquired Fund for use in
no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in
connection with the transactions contemplated herein shall comply in
all material respects with federal securities and other laws and
regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
o) The Acquired Fund has elected to qualify and has qualified as a
"regulated investment company" under the Code (a "RIC"), as of and
since its first taxable year; has been a RIC under the Code at all
times since the end of its first taxable year when it so qualified;
and qualifies and will continue to qualify as a RIC under the Code for
its taxable year ending upon its liquidation.
p) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act or Massachusetts law for the
execution of this Agreement by the Trust, for itself and on behalf of
the Acquired Fund, except for the effectiveness of the Registration
Statement (as defined in paragraph 5.7), and the filing of any
articles, certificates or other documents that may be required under
Massachusetts law, and except for such other consents, approvals,
authorizations and filings as have been made or received, and except
for such consents, approvals, authorizations and filings as may be
required subsequent to the Closing Date, it being understood, however,
that this Agreement and the transactions contemplated herein must be
approved by the shareholders of the Acquired Fund as described in
paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Trust on behalf of the
Acquiring Fund represents and warrants to the Trust on behalf of the Acquired
Fund as follows:
a) The Acquiring Fund is a legally designated, separate series of a
business trust duly organized, validly existing and in good standing
under the laws of Massachusetts.
b) The Trust is registered as an open-end management investment company
under the 1940 Act, and the Acquiring Fund's registration with the
Commission as an investment company under the 1940 Act is in full
force and effect.
c) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act, and the rules and
regulations thereunder, and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
or necessary to make such statements therein, in light of the
circumstances under which they were made, not misleading.
d) The Acquiring Fund is not in violation of, and the execution, delivery
and performance of this Agreement will not result in a violation of
any provision of the Trust's Declaration of Trust or By-Laws or of any
material agreement, indenture, instrument, contract, lease, or other
undertaking to which the Acquiring Fund is a party or by which it is
bound.
e) No litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquiring Fund or any of its
properties or assets, which, if adversely determined, would materially
and adversely affect its financial condition, the conduct of its
business, or the ability of the Acquiring Fund to carry out the
transactions contemplated by this Agreement. The Acquiring Fund knows
of no facts that might form the basis for the institution of such
proceedings and it is not a party to or subject to the provisions of
any order, decree, or judgment of any court or governmental body that
materially and adversely affects its business or its ability to
consummate the transaction contemplated herein.
f) The financial statements of the Acquiring Fund as of May 31, 2006, and
for the fiscal year then ended, have been prepared in accordance with
generally accepted accounting principles, and audited by
PricewaterhouseCoopers LLP, independent registered public accounting
firm, and such statements (copies of which have been furnished to the
Acquired Fund) fairly and accurately reflect the financial condition
of the Acquiring Fund as of such date, and there are no known
contingent liabilities of the Acquiring Fund as of such date that are
not disclosed in such statements.
g) The unaudited financial statements of the Acquiring Fund as of
November 30, 2006, and for the six months then ended, have been
prepared in accordance with generally accepted accounting principles,
and such statements (copies of which have been furnished to the
Acquired Fund) fairly and accurately reflect the financial condition
of the Acquiring Fund as of such date, and there are no known
contingent liabilities of the Acquiring Fund as of such date that are
not disclosed in such statements.
h) Since the date of the financial statements referred to in subparagraph
(g) above, there have been no material adverse changes in the
Acquiring Fund's financial condition, assets, liabilities or business
(other than changes occurring in the ordinary course of business), or
any incurrence by the Acquiring Fund of indebtedness maturing more
than one year from the date such indebtedness was incurred, except as
identified and disclosed by the Acquiring Fund on SCHEDULE 4.2 to this
Agreement. For the purposes of this subparagraph (h), a decline in the
net asset value of the Acquiring Fund in and of itself shall not
constitute a material adverse change.
i) All federal and other tax returns and reports of the Acquiring Fund
required by law to be filed, have been timely and accurately filed and
all federal and other taxes shown due on such returns and reports have
been paid, or provision shall have been made for their payment. To the
best of the Acquiring Fund's knowledge, no such return is currently
under audit, and no assessment has been asserted with respect to such
returns.
j) All issued and outstanding Acquiring Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquiring
Fund. The Acquiring Fund has no outstanding options, warrants, or
other rights to subscribe for or purchase any Acquiring Fund Shares,
and has no outstanding securities convertible into any Acquiring Fund
Shares.
k) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquiring
Fund and its Board of Directors, and this Agreement constitutes a
valid and binding obligation of the Acquiring Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors' rights and to general equity principles.
l) Acquiring Fund Shares to be issued and delivered to the Acquired Fund
for the account of the Acquired Fund Shareholders pursuant to the
terms of this Agreement will, at the Closing Date, have been duly
authorized. When so issued and delivered, such shares will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and
non-assessable.
m) The information to be furnished by the Acquiring Fund for use in
no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in
connection with the transactions contemplated herein shall comply in
all material respects with federal securities and other laws and
regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
n) The Acquiring Fund has elected to qualify and has qualified as a RIC
under the Code, as of and since its first taxable year; has been a RIC
under the Code at all times since the end of its first taxable year
when it so qualified; and qualifies and shall continue to qualify as a
RIC under the Code for its current taxable year.
o) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the 1934 Act, the 1940 Act or
Massachusetts law for the execution of this Agreement by the Trust,
for itself, and on behalf of the Acquiring Fund, except for the
effectiveness of the Registration Statement (as defined in paragraph
5.7), and the filing of any articles, certificates or other documents
that may be required under Massachusetts law, and except for such
other consents, approvals, authorizations and filings as have been
made or received, and except for such consents, approvals,
authorizations and filings as may be required subsequent to the
Closing Date.
p) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act,
and any state blue sky or securities laws as it may deem appropriate
in order to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired Fund
will each operate its respective business in the ordinary course between the
date of this Agreement and the Closing Date, it being understood that such
ordinary course of business will include customary dividends and shareholder
purchases and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The Trust will call a special meeting of the
Acquired Fund Shareholders to consider and act upon this Agreement and to take
all other appropriate action necessary to obtain approval of the transactions
contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the
Acquiring Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund will each take or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within sixty days after the Closing Date, the Acquired Fund shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the Acquired Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, and which will be certified by the Trust's
Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY STATEMENT.
The Trust will review and file with the Commission a registration statement on
Form N-14 relating to the Acquiring Fund Shares to be issued to shareholders of
the Acquired Fund (the "Registration Statement"). The Registration Statement
shall include a proxy statement and a prospectus of the Acquiring Fund relating
to the transaction contemplated by this Agreement. The Registration Statement
shall be in compliance with the 1933 Act, the 1934 Act and the 1940 Act, as
applicable. Each party will provide the other party with the materials and
information necessary to prepare the Registration Statement (the "Proxy
Materials"), for inclusion therein, in connection with the meeting of the
Acquired Fund Shareholders to consider the approval of this Agreement and the
transactions contemplated herein.
5.8 DISTRIBUTIONS. On or before the Closing Date, the Acquired Fund shall
have declared and paid a dividend or dividends which, together with all previous
such dividends, shall have the effect of distributing to the Acquired Fund
Shareholders all of the Acquired Fund's investment company taxable income
(computed without regard to any deduction for dividends paid), if any, plus the
excess, if any, of its interest income excludible from gross income under
Section 103(a) of the Code over its deductions disallowed under Sections 265 and
171(a)(2) of the Code for all taxable periods or years ending on or before the
Closing Date, and all of its net capital gains realized (after reduction for any
capital loss carry forward), if any, in all taxable periods or years ending on
or before the Closing Date. In addition, the Acquired Fund shall declare and pay
any dividends for the period between the Closing Date and the next business day
following the Closing Date to the Acquired Fund Shareholders.
5.9 TAX RETURNS. The Acquiring Fund and the Acquired Fund agree to
cooperate with each other after the Closing in filing any tax return, amended
return or claim for refund, determining a liability for taxes or a right to a
refund of taxes or participating in or conducting any audit or other proceeding
in respect of taxes.
5.10 CONFIRMATION OF TAX BASIS. The Acquired Fund shall deliver to the
Acquiring Fund on the Closing Date confirmations or other adequate evidence as
to the tax basis and holding period of each of the Assets delivered to the
Acquiring Fund hereunder.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by the Acquiring Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
subject to the following conditions:
6.1 All representations, covenants, and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date. The Acquiring Fund shall have
delivered to the Acquired Fund on such Closing Date a certificate executed in
the Acquiring Fund's name by the Trust's President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquired Fund and dated as of the Closing Date, to such effect and as to such
other matters as the Acquired Fund shall reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by the Acquired Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
shall be subject to the following conditions:
7.1 All representations, covenants, and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of such Closing Date. The Acquired Fund shall have
delivered to the Acquiring Fund on such Closing Date a certificate executed in
the Acquired Fund's name by the Trust's President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of such Closing Date, to such effect and as to such
other matters as the Acquiring Fund shall reasonably request.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, together with a list of
the Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Date, certified by the Treasurer of the Trust.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with respect
to the Acquired Fund, shall have been approved by the requisite vote of the
Board of Trustees and the Acquired Fund Shareholders in accordance with
applicable law and the provisions of the Trust's Declaration of Trust and
By-Laws. Certified copies of the resolutions evidencing such approval shall have
been delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action,
suit or other proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with this Agreement or the transactions
contemplated herein.
8.3 All required consents of other parties and all other consents, orders,
and permits of federal, state and local regulatory authorities (including those
of the Commission and of state securities authorities, including any necessary
"no-action" positions and exemptive orders from such federal and state
authorities) to permit consummation of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund, provided that
either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof shall have been
issued. To the best knowledge of the parties to this Agreement, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.5 The parties shall have received an opinion of Reed Smith LLP
substantially to the effect that for federal income tax purposes:
a) The transfer of all of the Acquired Fund's assets to the Acquiring
Fund solely in exchange for Acquiring Fund Shares (followed by the
distribution of Acquiring Fund Shares to the Acquired Fund
Shareholders in dissolution and liquidation of the Acquired Fund) will
constitute a "reorganization" within the meaning of Section 368(a) of
the Code, and the Acquiring Fund and the Acquired Fund will each be a
"party to a reorganization" within the meaning of Section 368(b) of
the Code.
b) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for
Acquiring Fund Shares.
c) No gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund solely in
exchange for Acquiring Fund Shares or upon the distribution (whether
actual or constructive) of Acquiring Fund Shares to Acquired Fund
Shareholders in exchange for their Acquired Fund Shares.
d) No gain or loss will be recognized by any Acquired Fund Shareholder
upon the exchange of its Acquired Fund Shares for Acquiring Fund
Shares.
e) The aggregate tax basis of the Acquiring Fund Shares received by each
Acquired Fund Shareholder pursuant to the Reorganization will be the
same as the aggregate tax basis of the Acquired Fund Shares held by it
immediately prior to the Reorganization. The holding period of the
Acquiring Fund Shares received by each Acquired Fund Shareholder will
include the period during which the Acquired Fund Shares exchanged
therefor were held by such shareholder, provided the Acquired Fund
Shares are held as capital assets at the time of the Reorganization.
f) The tax basis of the Acquired Fund's assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Acquired
Fund immediately prior to the Reorganization. The holding period of
the assets of the Acquired Fund in the hands of the Acquiring Fund
will include the period during which those assets were held by the
Acquired Fund.
Such opinion shall be based on customary assumptions and such representations
Reed Smith LLP may reasonably request, and the Acquired Fund and Acquiring Fund
will cooperate to make and certify the accuracy of such representations. The
foregoing opinion may state that no opinion is expressed as to the effect of the
Reorganization on the Acquiring Fund, the Acquired Fund or any Acquired Fund
Shareholder with respect to any asset as to which unrealized gain or loss is
required to be recognized for federal income tax purposes at the end of a
taxable year (or on the termination or transfer thereof) under a mark-to-market
system of accounting. Notwithstanding anything herein to the contrary, neither
the Acquiring Fund nor the Acquired Fund may waive the conditions set forth in
this paragraph 8.5.
ARTICLE IX
EXPENSES
As soon as practical after the Closing, American Century Investment
Management, Inc., as Advisor to the Acquiring Fund shall bear the expenses
associated with the Reorganization. The Acquiring Fund shall bear expenses
associated with the qualification of Acquiring Fund Shares for sale in the
various states. Reorganization expenses include, without limitation: (a)
expenses associated with the preparation and filing of the Proxy Materials; (b)
postage; (c) printing; (d) accounting fees; (e) legal fees incurred by each
Fund; (f) solicitation costs of the transaction; and (g) other related
administrative or operational costs.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Trust, on behalf of the Acquiring Fund, and the Trust, on behalf
of the Acquired Fund, agree that neither party has made to the other party any
representation, warranty and/or covenant not set forth herein, and that this
Agreement constitutes the entire agreement between the parties.
10.2 Except as specified in the next sentence set forth in this paragraph
10.2, the representations, warranties, and covenants contained in this Agreement
or in any document delivered pursuant to or in connection with this Agreement,
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing Date shall continue in effect
beyond the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
This Agreement may be terminated by the mutual agreement of the Trust and
the Trust. In addition, the Trust may at its option terminate this Agreement at
or before the Closing Date due to:
a) a breach by the other of any representation, warranty, or agreement
contained herein to be performed at or before the Closing Date, if not
cured within 30 days;
b) a condition herein expressed to be precedent to the obligations of the
terminating party that has not been met and it reasonably appears that
it will not or cannot be met; or
c) a determination by the Trust's Board of Trustees, that the
consummation of the transactions contemplated herein is not in the
best interest of the Acquired Fund or Acquiring Fund, respectively,
and notice given to the other party hereto.
In the event of any such termination, in the absence of willful default, there
shall be no liability for damages on the part of the Acquiring Fund, the
Acquired Fund, or the Trust, or their respective directors or officers, to the
other party or its directors or officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the officers of the Trust as
specifically authorized by the Board of Trustees; provided, however, that
following the meeting of the Acquired Fund Shareholders called by the Acquired
Fund pursuant to paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of Acquiring Fund
Shares to be issued to the Acquired Fund Shareholders under this Agreement to
the detriment of such shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Missouri, without regard to the conflict of laws rules
of that or any other jurisdiction.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
AMERICAN CENTURY MUNICIPAL TRUST
on behalf of its series,
AMERICAN CENTURY TAX-FREE BOND FUND
---------------------------------------------
AMERICAN CENTURY MUNICIPAL TRUST
on behalf of its series,
AMERICAN CENTURY [_______] FUND
---------------------------------------------
EXHIBIT B
FORM OF AMENDMENT TO THE CHARTER
OF
_________________________, INC.
(the "Corporation")
The shares of each class of shares of the Corporation's stock identified below
as a predecessor class of a series (each such class, a "Predecessor Class") are
hereby reclassified as additional shares of the class identified below as the
successor class of such series (each such class, a "Successor Class"), as
follows (the terms "series" and "class" having the meanings set forth in the
charter of the Corporation):
1. All issued and outstanding shares of each Predecessor Class are hereby
reclassified into that number of shares of the corresponding Successor
Class having a total net asset value equal to the total net asset
value at the effective time of this amendment of the respective
Predecessor Class shares;
2. All authorized but unissued shares of each Predecessor Class are
hereby reclassified as shares of the corresponding Successor Class;
and
3. The assets and liabilities previously allocated to each Predecessor
Class are hereby reallocated to the corresponding Successor Class.
For purposes of this amendment, the Predecessor Classes and corresponding
Successor Classes are as follows:
SERIES PREDECESSOR CLASS SUCCESSOR CLASS
EXHIBIT C
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
ARIZONA MUNICIPAL BOND FUND
FLORIDA MUNICIPAL BOND FUND
Market Perspective
BY DAVID MACEWEN, CHIEF INVESTMENT OFFICER, FIXED INCOME
ECONOMIC GROWTH PUSHED COMMODITY PRICES & INTEREST RATES HIGHER
Strong economic growth abroad and resilient growth in the U.S. (despite a
devastating 2005 hurricane season and record-high energy prices) helped push
U.S. interest rates and Treasury yields to their highest levels since 2001-2002
during the 12 months ended May 31, 2006. The U.S. economy grew at a moderate
rate of approximately 3.5% for the period, despite dipping below 2% in the
fourth quarter of 2005. Robust overseas growth, particularly in emerging Asian
markets such as China and India, helped push the Commodity Research Bureau index
to a record high, fanning inflation fears and forcing global central banks to
raise interest rates.
TREASURY YIELDS INVERTED, INDICATING POSSIBLE ECONOMIC WEAKNESS AHEAD
In the U.S., the Federal Reserve increased its overnight interest rate target
eight times during the 12 months, raising it from 3% to 5%. That display of
inflation-fighting discipline helped prevent long-term Treasury yields from
rising as much as short-term yields, reducing or "flattening" the difference
between these yields. On May 31, 2005, two- and 10-year Treasury yields were
3.58% and 3.98%, respectively, 0.40 percentage point apart. On May 31, 2006, the
respective yields for two- and 10-year notes were 5.04% and 5.12%, just 0.08
percentage point apart. These yields also "inverted" temporarily during the
first quarter of 2006 when the two-year yield rose higher than the 10-year. This
phenomenon often precedes economic downturns.
MUNICIPAL MARKET GENERALLY OUTPERFORMED TAXABLE MARKET
Rising interest rates created challenging conditions for bonds, which, in
general, had to rely on their interest income to help offset price declines.
Under these conditions, the best performers were money market and high-yield
securities. In addition, the municipal market generally outperformed the
taxable--municipal yields didn't rise or flatten as much as Treasury yields.
Reasons for municipal outperformance included strong demand from investors
(including those who recognized that municipals typically outperform in bond
bear markets), declining municipal supply growth (less issuance and refinancing
as interest rates rose), and favorable economic growth (providing improved tax
revenues and credit conditions for municipal debt).
U.S. FIXED-INCOME TOTAL RETURNS
For the 12 months ended May 31, 2006
- --------------------------------------------------------------------------------
LEHMAN BROTHERS MUNICIPAL MARKET INDICES
- --------------------------------------------------------------------------------
Municipal Bond 1.89%
- --------------------------------------------------------------------------------
3-Year Municipal Bond 1.59%
- --------------------------------------------------------------------------------
5-Year General Obligation (GO) 1.24%
- --------------------------------------------------------------------------------
Long-Term Municipal Bond (22+ years) 3.20%
- --------------------------------------------------------------------------------
Non-Investment-Grade (High-Yield) 7.20%
- --------------------------------------------------------------------------------
TAXABLE MARKET RETURNS
- --------------------------------------------------------------------------------
Lehman Brothers U.S. Aggregate Index -0.48%
- --------------------------------------------------------------------------------
Lehman Brothers U.S. Treasury Index -1.39%
- --------------------------------------------------------------------------------
3-Month Treasury Bill 3.85%
- --------------------------------------------------------------------------------
10-Year Treasury Note -5.25%
- --------------------------------------------------------------------------------
Source: Lehman Brothers Inc.
Arizona Municipal Bond - Performance
TOTAL RETURNS AS OF MAY 31, 2006
--------------------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS 1.59% 4.30% 4.94% 5.24% 4/11/94
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL
5-YEAR GO INDEX 1.24% 4.06% 4.88% 5.10%(1) --
- --------------------------------------------------------------------------------
LIPPER OTHER STATES
INTERMEDIATE
MUNICIPAL DEBT FUNDS
AVERAGE RETURNS(2) 0.67% 3.69% 4.34% 4.56%(3) --
- --------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 5/31/06(2) 5 of 119 11 of 95 8 of 66 5 of 45(3) --
- --------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 6/30/06(2) 7 of 119 12 of 95 8 of 67 5 of 45(3) --
- --------------------------------------------------------------------------------
A Class 2/27/04
No sales charge* 1.34% -- -- 1.45%
With sales charge* -3.25% -- -- -0.60%
- --------------------------------------------------------------------------------
B Class 2/27/04
No sales charge* 0.61% -- -- 0.71%
With sales charge* -3.39% -- -- -0.62%
- --------------------------------------------------------------------------------
C Class 0.58% -- -- 0.69% 2/27/04
- --------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
sales charge for fixed income funds and may be subject to a maximum CDSC of
1.00%. B Class shares redeemed within six years of purchase are subject to a
CDSC that declines from 5.00% during the first year after purchase to 0.00% the
sixth year after purchase. C Class shares redeemed within 12 months of purchase
are subject to a maximum CDSC of 1.00%. Please see the Share Class Information
pages for more about the applicable sales charges for each share class. The SEC
requires that mutual funds provide performance information net of maximum sales
charges in all cases where charges could be applied.
(1) Since 3/31/94, the date nearest the Investor Class's inception for which
data are available.
(2) Data provided by Lipper Inc. -- A Reuters Company. (c)2006 Reuters. All
rights reserved. Any copying, republication or redistribution of Lipper
content, including by caching, framing or similar means, is expressly
prohibited without the prior written consent of Lipper. Lipper shall not be
liable for any errors or delays in the content, or for any actions taken in
reliance thereon.
Lipper Fund Performance -- Performance data is total return, and is
preliminary and subject to revision.
Lipper Rankings -- Rankings are based only on the universe shown and are
based on average annual total returns. This listing might not represent the
complete universe of funds tracked by Lipper.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper and may be incomplete. No offer or solicitations to buy or sell any
of the securities herein is being made by Lipper.
(3) Since 4/14/94, the date nearest the Investor Class's inception for which
data are available.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
Arizona Municipal Bond - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made May 31, 1996
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended May 31
- ----------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
- ----------------------------------------------------------------------------------------------------
Investor Class 5.77% 7.19% 4.51% 0.20% 10.57% 6.74% 9.36% -1.06% 5.21% 1.59%
- ----------------------------------------------------------------------------------------------------
Lehman Brothers
Municipal 5-Year
GO Index 6.08% 6.95% 4.90% 0.65% 10.17% 6.33% 8.72% -0.22% 4.47% 1.24%
- ----------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
Arizona Municipal Bond - Portfolio Commentary
PORTFOLIO TEAM LEADER: ALAN KRUSS
MR. KRUSS, VICE PRESIDENT AND PORTFOLIO MANAGER, JOINED AMERICAN CENTURY
INVESTMENTS IN 1997 AND BECAME A PORTFOLIO MANAGER IN 2001. IN APRIL 2006, HE
TOOK OVER ARIZONA MUNICIPAL BOND'S TEAM-LEADER ROLE FROM KENNETH SALINGER, WHO
LEFT THE COMPANY TO PURSUE OTHER INTERESTS.
PERFORMANCE SUMMARY
Arizona Municipal Bond returned 1.59%* for the 12 months ended May 31, 2006,
more than double the 0.67% average total return of Lipper's Other States
Intermediate Municipal Debt Funds. In addition, Arizona Municipal Bond
outperformed the Lehman Brothers Municipal 5-Year GO Index, which returned
1.24%.
The fund's longer-term performance was also noteworthy: Arizona Municipal Bond
ranked among the top 15% of its Lipper peer group for the trailing five and 10
years while returning more than Lehman's Municipal 5-Year GO Index.
Although favorable by comparison, the fund's absolute 12-month return was
modest, reflecting myriad obstacles faced by municipal bonds and the broader
bond market that are detailed in the Market Perspective on page 2. The
commentary below discusses the strategies that we employed for Arizona Municipal
Bond in that environment.
YIELD SUMMARY
One of Arizona Municipal Bond's investment objectives is to seek high current
income exempt from federal and Arizona income taxes. Along those lines, the
fund's 30-day SEC yield was 3.65% as of May 31, 2006, which translated into the
attractive tax-equivalent yields shown in the table at top right. By comparison,
Arizona Municipal Bond's Lipper group average 30-day SEC yield was only 3.11%.
All else being equal, a higher yield can boost returns and pave the way for
better performance. It's also worth noting that Arizona Municipal Bond achieved
that yield advantage while generally steering clear of bonds subject to the
Alternative Minimum Tax.
PORTFOLIO STRATEGY & OUTLOOK
Within the framework of our repeatable, multi-layered investment approach, one
of our main emphasized strategies involved actively managing Arizona Municipal
Bond's bond-maturity
PORTFOLIO AT A GLANCE
- --------------------------------------------------------------------------------
AS OF AS OF
5/31/06 11/30/05
- --------------------------------------------------------------------------------
Weighted Average
Maturity 8.3 yrs 7.9 yrs
- --------------------------------------------------------------------------------
Average Duration
(Modified) 4.4 yrs 4.1 yrs
- --------------------------------------------------------------------------------
YIELDS AS OF MAY 31, 2006
- --------------------------------------------------------------------------------
30-DAY SEC YIELD
- --------------------------------------------------------------------------------
Investor Class 3.65%
- --------------------------------------------------------------------------------
A Class 3.25%
- --------------------------------------------------------------------------------
B Class 2.65%
- --------------------------------------------------------------------------------
C Class 2.65%
- --------------------------------------------------------------------------------
INVESTOR CLASS 30-DAY TAX-EQUIVALENT YIELDS(1)
- --------------------------------------------------------------------------------
28.54% Tax Bracket 5.11%
- --------------------------------------------------------------------------------
31.40% Tax Bracket 5.32%
- --------------------------------------------------------------------------------
36.38% Tax Bracket 5.73%
- --------------------------------------------------------------------------------
38.28% Tax Bracket 5.91%
- --------------------------------------------------------------------------------
(1) The tax brackets indicated are combined federal and state tax brackets.
Actual tax-equivalent yields may be lower, if alternative minimum tax is
applicable.
*All fund returns and yields referenced in this commentary are for Investor
Class shares.
(continued)
Arizona Municipal Bond - Portfolio Commentary
structure. In particular, we positioned the portfolio to benefit from a
diminishing gap between the yields of short- and long-term municipal bonds.
In order to appropriately position the portfolio to take advantage of this
forecast scenario, we employed a "barbell" bond-maturity structure. We achieved
this structure by overweighting short- and long-term municipal bonds, while
comparatively underweighting intermediate-term bonds. That paid off as the yield
gap between two- and 30-year triple-A-rated municipal bonds dropped from
approximately 161 basis points (1.61%) to only 83 basis points over the 12
months.
However, the municipal yield curve's flattening lost momentum toward the end of
the period. And when factored in with how much yield spreads had already
contracted, as well as with the latest economic, market, and interest rate
forecasts at that time, we decided that the time for a strategy shift was at
hand.
So we pared short- and long-term bond holdings and generally invested the
proceeds in intermediate-term securities, establishing a "curve-neutral"
bond-maturity structure.
Lastly, while conservatively managing the portfolio's interest rate sensitivity,
we increased triple-B municipal bond holdings. These securities generally
afforded higher yields than their like-maturity, higher-rated equivalents,
boosting the portfolio's income stream and providing a cushion against the
backdrop of falling bond prices and rising yields.
ARIZONA MUNICIPAL BOND'S PLACE IN YOUR PORTFOLIO
Arizona Municipal Bond is designed to be a core bond holding and seeks safety of
principal and high current income by investing in debt securities--issued by
cities, counties and municipalities, and U.S. territories--with interest
payments exempt from regular federal and Arizona income taxes.
Because municipal bonds typically don't move in lock-step with equities, Arizona
Municipal Bond also provides diversification benefits. But it's important to
keep in mind that diversification does not insure against losses.
PORTFOLIO COMPOSITION BY CREDIT RATING
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/06 11/30/05
- --------------------------------------------------------------------------------
AAA 70% 74%
- --------------------------------------------------------------------------------
AA 8% 8%
- --------------------------------------------------------------------------------
A 9% 11%
- --------------------------------------------------------------------------------
BBB 13% 7%
- --------------------------------------------------------------------------------
Ratings provided by independent research companies. These ratings are listed in
Standard & Poor's format even if they were provided by other sources.
TOP FIVE SECTORS AS OF MAY 31, 2006
- --------------------------------------------------------------------------------
% OF FUND
INVESTMENTS
- --------------------------------------------------------------------------------
General Obligation (GO) 28%
- --------------------------------------------------------------------------------
Certificates of Participation
(COPs)/Leases 16%
- --------------------------------------------------------------------------------
Prerefunded 15%
- --------------------------------------------------------------------------------
Water and Sewer Revenue 14%
- --------------------------------------------------------------------------------
Industrial Development Revenue 10%
- --------------------------------------------------------------------------------
Florida Municipal Bond - Performance
TOTAL RETURNS AS OF MAY 31, 2006
--------------------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS 1.48% 4.12% 5.10% 5.31% 4/11/94
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL
5-YEAR GO INDEX 1.24% 4.06% 4.88% 5.10%(1) --
- --------------------------------------------------------------------------------
LIPPER FLORIDA
INTERMEDIATE
MUNICIPAL DEBT FUNDS
AVERAGE RETURNS(2) 0.87% 3.45% 4.14% 4.37%(3) --
- --------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 5/31/06(2) 5 of 18 2 of 15 1 of 11 1 of 10(3) --
- --------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 6/30/06(2) 5 of 18 2 of 15 1 of 12 1 of 10(3) --
- --------------------------------------------------------------------------------
A Class 2/27/04
No sales charge* 1.23% -- -- 1.15%
With sales charge* -3.33% -- -- -0.87%
- --------------------------------------------------------------------------------
B Class 2/27/04
No sales charge* 0.47% -- -- 0.39%
With sales charge* -3.53% -- -- -0.94%
- --------------------------------------------------------------------------------
C Class 0.47% -- -- 0.40% 2/27/04
- --------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a 4.50% maximum initial
sales charge for fixed income funds and may be subject to a maximum CDSC of
1.00%. B Class shares redeemed within six years of purchase are subject to a
CDSC that declines from 5.00% during the first year after purchase to 0.00% the
sixth year after purchase. C Class shares redeemed within 12 months of purchase
are subject to a maximum CDSC of 1.00%. Please see the Share Class Information
pages for more about the applicable sales charges for each share class. The SEC
requires that mutual funds provide performance information net of maximum sales
charges in all cases where charges could be applied.
(1) Since 3/31/94, the date nearest the Investor Class's inception for which
data are available.
(2) Data provided by Lipper Inc. -- A Reuters Company. (c)2006 Reuters. All
rights reserved. Any copying, republication or redistribution of Lipper
content, including by caching, framing or similar means, is expressly
prohibited without the prior written consent of Lipper. Lipper shall not be
liable for any errors or delays in the content, or for any actions taken in
reliance thereon.
Lipper Fund Performance -- Performance data is total return, and is
preliminary and subject to revision.
Lipper Rankings -- Rankings are based only on the universe shown and are
based on average annual total returns. This listing might not represent the
complete universe of funds tracked by Lipper.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper and may be incomplete. No offer or solicitations to buy or sell any
of the securities herein is being made by Lipper.
(3) Since 4/14/94, the date nearest the Investor Class's inception for which
data are available.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
Florida Municipal Bond - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made May 31, 1996
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended May 31
- ----------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
- ----------------------------------------------------------------------------------------------------
Investor Class 6.63% 8.20% 4.71% 0.49% 10.71% 5.98% 9.90% -1.30% 4.88% 1.48%
- ----------------------------------------------------------------------------------------------------
Lehman Brothers
Municipal 5-Year
GO Index 6.08% 6.95% 4.90% 0.65% 10.17% 6.33% 8.72% -0.22% 4.47% 1.24%
- ----------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
Florida Municipal Bond - Portfolio Commentary
PORTFOLIO TEAM LEADER: ALAN KRUSS
MR. KRUSS, VICE PRESIDENT AND PORTFOLIO MANAGER, JOINED AMERICAN CENTURY
INVESTMENTS IN 1997 AND BECAME A PORTFOLIO MANAGER IN 2001. IN APRIL 2006, HE
TOOK OVER FLORIDA MUNICIPAL BOND'S TEAM-LEADER ROLE FROM KENNETH SALINGER, WHO
LEFT THE COMPANY TO PURSUE OTHER INTERESTS.
PERFORMANCE SUMMARY
Florida Municipal Bond returned 1.48%* for the 12 months ended May 31, 2006,
solidly outpacing the 0.87% average total return of Lipper's Florida
Intermediate Municipal Debt Funds. In addition, Florida Municipal Bond
outperformed the Lehman Brothers Municipal 5-Year GO Index, which returned
1.24%. And it's worth keeping in mind that fees do not reduce the return of the
Lehman index.
The fund's longer-term performance was also noteworthy: Florida Municipal Bond
ranked among the top 15% of its Lipper peer group for the trailing five and 10
years while returning more than Lehman's Municipal 5-Year GO Index.
Although favorable by comparison, the fund's absolute 12-month return was
modest, reflecting myriad obstacles faced by municipal bonds and the broader
bond market that are detailed in the Market Perspective on page 2. The
commentary below discusses the strategies that we employed for Florida Municipal
Bond in that environment.
YIELD SUMMARY
Seeking high current income exempt from federal income tax as well as the
Florida intangible personal property tax is one of Florida Municipal Bond's
primary investment objectives. Along those lines, the fund's 30-day SEC yield
was 3.63% as of May 31, 2006. By comparison, Florida Municipal Bond's Lipper
group average 30-day SEC yield was only 3.17% at the end of the 12 months.
A higher yield can boost returns and pave the way for better performance, all
else being equal.
PORTFOLIO STRATEGY & OUTLOOK
One of the main strategies that we emphasized within the framework of our
repeatable, multi-layered investment approach involved actively managing Florida
Municipal Bond's bond-maturity structure. In particular, we positioned the
portfolio to benefit from a declining gap between the yields of short- and
long-term municipal bonds.
PORTFOLIO AT A GLANCE
- --------------------------------------------------------------------------------
AS OF AS OF
5/31/06 11/30/05
- --------------------------------------------------------------------------------
Weighted Average
Maturity 7.7 yrs 8.3 yrs
- --------------------------------------------------------------------------------
Average Duration
(Modified) 4.5 yrs 4.3 yrs
- --------------------------------------------------------------------------------
YIELDS AS OF MAY 31, 2006
- --------------------------------------------------------------------------------
30-DAY SEC YIELD
- --------------------------------------------------------------------------------
Investor Class 3.63%
- --------------------------------------------------------------------------------
A Class 3.22%
- --------------------------------------------------------------------------------
B Class 2.64%
- --------------------------------------------------------------------------------
C Class 2.62%
- --------------------------------------------------------------------------------
INVESTOR CLASS 30-DAY TAX-EQUIVALENT YIELDS(1)
- --------------------------------------------------------------------------------
25.00% Tax Bracket 4.84%
- --------------------------------------------------------------------------------
28.00% Tax Bracket 5.04%
- --------------------------------------------------------------------------------
33.00% Tax Bracket 5.42%
- --------------------------------------------------------------------------------
35.00% Tax Bracket 5.58%
- --------------------------------------------------------------------------------
(1) The tax brackets indicated are for federal taxes only. Actual tax-equivalent
yields may be lower, if alternative minimum tax is applicable.
*All fund returns and yields referenced in this commentary are for Investor
Class shares.
(continued)
Florida Municipal Bond - Portfolio Commentary
That meant employing a "barbell" structure, which tends to outperform in such a
scenario. We achieved this structure by overweighting short- and long-term
municipal bonds, while comparatively underweighting intermediate-term bonds.
That paid off as the yield gap between two- and 30-year triple-A-rated municipal
bonds dropped almost in half over the 12 months.
Toward the end of the period, however, the municipal yield curve's flattening
appeared to be winding down. That notion was supported by economic, market, and
interest rate forecasts at that time as well as by how much yield spreads had
already contracted. So we pared short- and long-term bond holdings and generally
invested the proceeds in intermediate-term securities.
We also increased Florida Municipal Bond's triple-B municipal bond holdings. The
triple-B bonds generally afforded higher yields than their like-maturity,
higher-rated counterparts, boosting the portfolio's income stream and providing
a cushion against the backdrop of rising bond yields.
By the end of the period, we felt that the yield advantage of triple-B bonds
over triple-A equivalents had contracted enough to merit holding onto our
triple-B positions, but not actively expanding upon them.
FLORIDA MUNICIPAL BOND'S PLACE IN YOUR PORTFOLIO
Florida Municipal Bond is designed to be a core bond holding and seeks safety of
principal and high current income by investing in debt securities--issued by
cities, counties and municipalities, and U.S. territories--with interest
payments exempt from federal income tax as well as the Florida intangible
personal property tax.
Because municipal bonds typically don't move in lock-step with equities, Florida
Municipal Bond also provides diversification benefits. But it's important to
keep in mind that diversification does not insure against losses.
PORTFOLIO COMPOSITION BY CREDIT RATING
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/06 11/30/05
- --------------------------------------------------------------------------------
AAA 78% 84%
- --------------------------------------------------------------------------------
AA 1% 1%
- --------------------------------------------------------------------------------
A 2% 1%
- --------------------------------------------------------------------------------
BBB 19% 14%
- --------------------------------------------------------------------------------
Ratings provided by independent research companies. These ratings are listed in
Standard & Poor's format even if they were provided by other sources.
TOP FIVE SECTORS AS OF MAY 31, 2006
- --------------------------------------------------------------------------------
% OF FUND
INVESTMENTS
- --------------------------------------------------------------------------------
Water and Sewer Revenue 16%
- --------------------------------------------------------------------------------
Prerefunded 16%
- --------------------------------------------------------------------------------
Certificates of Participation
(COPs)/Leases 9%
- --------------------------------------------------------------------------------
Transportation Revenue 9%
- --------------------------------------------------------------------------------
General Obligation (GO) 8%
- --------------------------------------------------------------------------------
Tax-Free Bond - Performance
TOTAL RETURNS AS OF MAY 31, 2006
----------------------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS 1.87% 4.34% 5.05% 5.42% 3/2/87
- --------------------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL
5-YEAR GO INDEX 1.24% 4.06% 4.88% 5.56%(1) --
- --------------------------------------------------------------------------------
AVERAGE RETURN
OF LIPPER'S
INTERMEDIATE
MUNICIPAL
DEBT FUNDS(2) 1.03% 3.94% 4.71% 5.55%(3) --
- --------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 5/31/06(2) 17 of 150 30 of 104 14 of 70 8 of 13(3) --
- --------------------------------------------------------------------------------
Investor Class's
Lipper Ranking
as of 6/30/06(2) 18 of 149 31 of 106 15 of 70 9 of 13(3) --
- --------------------------------------------------------------------------------
Institutional Class 2.07% -- -- 3.17% 4/15/03
- --------------------------------------------------------------------------------
Advisor Class -- -- -- 1.51%(4) 7/29/05
- --------------------------------------------------------------------------------
(1) Since 2/28/87, the date nearest the Investor Class's inception for which
data are available.
(2) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 Reuters. All
rights reserved. Any copying, republication or redistribution of Lipper
content, including by caching, framing or similar means, is expressly
prohibited without the prior written consent of Lipper. Lipper shall not be
liable for any errors or delays in the content, or for any actions taken in
reliance thereon.
Lipper Fund Performance -- Performance data is total return, and is
preliminary and subject to revision.
Lipper Rankings -- Rankings are based only on the universe shown and are
based on average annual total returns. This listing might not represent the
complete universe of funds tracked by Lipper.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be
reliable. Although carefully verified, data on compilations is not
guaranteed by Lipper and may be incomplete. No offer or solicitations to
buy or sell any of the securities herein is being made by Lipper.
(3) Since 3/31/87, the date nearest the Investor Class's inception for which
data are available.
(4) Total returns for periods less than one year are not annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
Tax-Free Bond - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made May 31, 1996
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended May 31
- --------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
- --------------------------------------------------------------------------------------------------
Investor Class 6.29% 7.60% 4.07% 0.44% 10.77% 6.45% 9.31% -0.79% 5.16% 1.87%
- --------------------------------------------------------------------------------------------------
Lehman Brothers
Municipal 5-Year
GO Index 6.08% 6.95% 4.90% 0.65% 10.17% 6.33% 8.72% -0.22% 4.47% 1.24%
- --------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
Investment income may be subject to certain state and local taxes and, depending
on your tax status, the federal alternative minimum tax (AMT). Capital gains are
not exempt from state and federal income tax.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
Tax-Free Bond - Portfolio Commentary
PORTFOLIO TEAM LEADER: ROBERT J. MILLER
MR. MILLER, VICE PRESIDENT AND PORTFOLIO MANAGER, JOINED AMERICAN CENTURY
INVESTMENTS IN JUNE 1998 AND BECAME A PORTFOLIO MANAGER IN FEBRUARY 2001. IN
APRIL 2006 HE TOOK OVER THE TEAM-LEADER ROLE FOR TAX-FREE BOND FROM KENNETH
SALINGER, WHO LEFT THE COMPANY TO PURSUE OTHER INTERESTS.
PERFORMANCE SUMMARY
Tax-Free Bond returned 1.87%* for the 12 months ended May 31, 2006, solidly
outpacing the 1.03% average return of Lipper's Intermediate Municipal Debt
Funds. The fund also outperformed the Lehman Brothers Municipal 5-Year GO Index,
which returned 1.24%. Tax-Free Bond's long-term performance was also noteworthy:
the fund ranked among the top 30% of its Lipper peer group for the trailing five
and 10 years while returning more than Lehman's Municipal 5-Year GO Index.
Although favorable by comparison, Tax-Free Bond's 12-month absolute return was
modest, reflecting a myriad of obstacles faced by municipal bonds and the
broader bond market that are detailed in the Market Perspective on page 2. The
commentary below discusses the strategies that we employed for Tax-Free Bond in
that environment.
YIELD SUMMARY
One of Tax-Free Bond's key investment objectives is to seek high current income
exempt from federal income tax. Along those lines, the fund's 30-day SEC yield
was 3.62% as of May 31, 2006, which translated into the attractive
tax-equivalent yields shown in the table at bottom right on this page. By
comparison, Tax-Free Bond's Lipper group average 30-day SEC yield was 3.38%.
All else being equal, a higher yield can boost returns and performance. And it's
worth noting that Tax-Free Bond achieved that yield advantage while steering
clear of bonds subject to the Alternative Minimum Tax.
PORTFOLIO STRATEGY & OUTLOOK
The fundamentals of our repeatable, multi-layered investment approach remained
central to our efforts, and one of our key strategies involved actively managing
Tax-Free Bond's bond-maturity structure. In particular, we positioned the
portfolio to benefit from a diminishing gap between the yields of short- and
long-term municipal bonds.
That meant employing a "barbell" bond maturity structure which tends to
outperform in such a scenario. We achieved the barbell by overweighting short-
and long-term municipal bonds, while comparatively underweighting
intermediate-term securities. That structure paid off as the yield gap between
two- and 30-year triple-A rated municipal bonds dropped from approximately 161
basis points (1.61%) to only 83 basis points over the 12 months.
YIELDS AS OF MAY 31, 2006
- --------------------------------------------------------------------------------
30-DAY SEC YIELD
- --------------------------------------------------------------------------------
Investor Class 3.62%
- --------------------------------------------------------------------------------
Institutional Class 3.82%
- --------------------------------------------------------------------------------
Advisor Class 3.38%
- --------------------------------------------------------------------------------
INVESTOR CLASS 30-DAY TAX-EQUIVALENT YIELDS(1)
- --------------------------------------------------------------------------------
25.0% Tax Bracket 4.83%
- --------------------------------------------------------------------------------
28.0% Tax Bracket 5.03%
- --------------------------------------------------------------------------------
33.0% Tax Bracket 5.40%
- --------------------------------------------------------------------------------
35.0% Tax Bracket 5.57%
- --------------------------------------------------------------------------------
(1) The tax brackets indicated are for federal taxes only. Actual
tax-equivalent yields may be lower, if alternative minimum tax is
applicable.
*All fund returns and yields referenced in this commentary are for Investor
Class shares.
(continued)
Tax-Free Bond - Portfolio Commentary
Toward the end of the period, however, the municipal yield curve's flattening
appeared to be largely over, a notion supported by how much yield spreads had
already contracted, as well as by economic, market, and interest rate forecasts
at that time.
So we pared back short- and long-term bond holdings and generally invested the
proceeds in intermediate-term securities, establishing a "curve-neutral"
emphasis.
Lastly, we conservatively managed the portfolio's interest rate sensitivity and
closely monitored supply and demand developments within and between the various
states. We also increased the portfolio's triple-B municipal bond holdings.
These securities, which reside on the lowest credit rung of the investment-grade
ladder, generally afforded higher yields than their like-maturity, higher-rated
equivalents. In addition to boosting the portfolio's income stream, that meant a
greater cushion against the backdrop of falling bond prices and rising yields.
TAX-FREE BOND'S PLACE IN YOUR PORTFOLIO
Tax-Free Bond is designed to be a core bond holding and seeks safety of
principal and high current income by investing in debt securities issued by
cities, counties and municipalities, and U.S. territories.
Because municipal bonds typically don't move in lock-step with equities under
various economic and market scenarios, Tax-Free Bond also potentially offers
diversification benefits for investors. But it's important to keep in mind that
even diversification does not insure against losses.
PORTFOLIO COMPOSITION BY CREDIT RATING
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/06 11/30/05
- --------------------------------------------------------------------------------
AAA 73% 73%
- --------------------------------------------------------------------------------
AA 3% 5%
- --------------------------------------------------------------------------------
A 5% 8%
- --------------------------------------------------------------------------------
BBB 19% 14%
- --------------------------------------------------------------------------------
Ratings provided by independent research companies. These ratings are listed in
Standard & Poor's format even if they were provided by other sources.
TOP FIVE STATES
AS OF MAY 31, 2006
- --------------------------------------------------------------------------------
% OF NET % OF NET
ASSETS ASSETS
AS OF AS OF
5/31/06 11/30/05
- --------------------------------------------------------------------------------
Texas 10.8% 13.8%
- --------------------------------------------------------------------------------
New Jersey 10.6% 4.8%
- --------------------------------------------------------------------------------
Arizona 8.8% 7.7%
- --------------------------------------------------------------------------------
Puerto Rico 7.9% 7.9%
- --------------------------------------------------------------------------------
Washington 7.0% 6.7%
- --------------------------------------------------------------------------------
UTILITIES
Market
Perspective
BY ENRIQUE CHANG, CHIEF INVESTMENT OFFICER, AMERICAN CENTURY INVESTMENTS
ECONOMIC GROWTH SURGED, THEN MODERATED
Economic growth--along with commodity prices, short-term interest rates, and
inflation--surged early in the 12-month period ended December 31, 2006. But
growth and inflation moderated in the second half of the year, when the Federal
Reserve (the Fed) halted its two-year string of interest rate hikes.
After a hurricane-related slowdown in the fourth quarter of 2005, U.S. gross
domestic product grew in the first quarter of 2006 at a 5.6% annualized pace,
the highest level in more than two years. The Fed steadily raised short-term
interest rates through June 2006 to keep inflation--including pressures from
soaring commodity prices--in check. The Fed finally snapped its string of rate
hikes in August 2006, leaving its target at 5.25%, a five-year high. By then,
economic growth had slowed, dragged down in part by a cooling housing market.
DOUBLE-DIGIT STOCK INDEX RETURNS
The Fed's pause and expectations for lower interest rates and mild inflation in
2007 helped produce double-digit stock index returns for 2006. Market rallies at
the start and end of the year offset a late-spring/early-summer selloff. Growth
stocks flourished in the latter rally, but value stocks outperformed growth for
the full year. Likewise, though large-cap stocks gained ground late in the
period, small-caps posted higher returns for the full year.
SENTIMENT REVERSED IN MAY AND JULY
Early in 2006, investors celebrated a dip in crude oil prices and strong
economic growth by pushing stock prices higher. The small-cap Russell 2000 Index
led the way, surging 13.92% by April 30. Sentiment changed in early May,
however, when the Fed made it clear that more interest rate hikes might be
necessary to control inflation. Between April 30 and July 15, the S&P 500 fell
5.28%, and the Russell 2000 more than doubled that loss as investors desired
larger, more stable companies.
The selloff ended in late July after Fed chairman Ben Bernanke predicted
inflation would moderate. The Fed's subsequent rate pause in August and plunging
energy prices triggered a substantial stock rebound during the last five months
of the year.
U.S. STOCK INDEX RETURNS
For the 12 months ended December 31, 2006
- --------------------------------------------------------------------------------
RUSSELL 1000 INDEX (LARGE-CAP) 15.46%
- --------------------------------------------------------------------------------
Russell 1000 Growth Index 9.07%
- --------------------------------------------------------------------------------
Russell 1000 Value Index 22.25%
- --------------------------------------------------------------------------------
RUSSELL MIDCAP INDEX 15.26%
- --------------------------------------------------------------------------------
Russell Midcap Growth Index 10.66%
- --------------------------------------------------------------------------------
Russell Midcap Value Index 20.22%
- --------------------------------------------------------------------------------
RUSSELL 2000 INDEX (SMALL-CAP) 18.37%
- --------------------------------------------------------------------------------
Russell 2000 Growth Index 13.35%
- --------------------------------------------------------------------------------
Russell 2000 Value Index 23.48%
- --------------------------------------------------------------------------------
Utilities - Performance
TOTAL RETURNS AS OF DECEMBER 31, 2006
--------------------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS 24.99% 9.73% 9.69% 9.34% 3/1/93
- --------------------------------------------------------------------------------
FUND BENCHMARK 27.20% 8.34% 9.82% 9.64%(1) --
- --------------------------------------------------------------------------------
S&P 500 INDEX(2) 15.79% 6.19% 8.42% 10.82%(1) --
- --------------------------------------------------------------------------------
Advisor Class 24.62% 9.44% -- 6.35% 6/25/98
- --------------------------------------------------------------------------------
(1) Since 2/28/93, the date nearest the Investor Class's inception for which
data are available.
(2) Data provided by Lipper Inc. - A Reuters Company. (c)2007 Reuters. All
rights reserved. Any copying, republication or redistribution of Lipper
content, including by caching, framing or similar means, is expressly
prohibited without the prior written consent of Lipper. Lipper shall not be
liable for any errors or delays in the content, or for any actions taken in
reliance thereon.
The data contained herein has been obtained from company reports, financial
reporting services, periodicals and other resources believed to be reliable.
Although carefully verified, data on compilations is not guaranteed by
Lipper and may be incomplete. No offer or solicitations to buy or sell any
of the securities herein is being made by Lipper.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. The fund concentrates its investments in a narrow segment
of the total market and is therefore subject to greater risks and market
fluctuations than a portfolio representing a broader range of industries.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
(continued)
Utilities - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made December 31, 1996
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended December 31
- ---------------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
- ---------------------------------------------------------------------------------------------------------
Investor Class 35.82% 27.43% 11.46% 3.97% -20.97% -27.44% 23.96% 23.81% 14.30% 24.99%
- ---------------------------------------------------------------------------------------------------------
Fund benchmark 34.50% 33.29% 12.36% 2.17% -16.90% -32.28% 25.38% 24.34% 11.14% 27.20%
- ---------------------------------------------------------------------------------------------------------
S&P 500 Index 33.36% 28.58% 21.04% -9.10% -11.89% -22.10% 28.68% 10.88% 4.91% 15.79%
- ---------------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. The fund concentrates its investments in a narrow segment
of the total market and is therefore subject to greater risks and market
fluctuations than a portfolio representing a broader range of industries.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
Utilities - Portfolio Commentary
PORTFOLIO MANAGERS: JOHN SCHNIEDWIND AND JOE STERLING
PERFORMANCE SUMMARY
Utilities gained 24.99%* for the 12 months ended December 31, 2006, compared
with the 27.20% return of its custom benchmark (defined on page 27), and the
30.57%** return of the Russell 1000 Utilities Index. The S&P 500, a broad market
measure, returned 15.79%. 2006 marked the third straight year in which the fund
and its benchmark outperformed the S&P 500.
We received positive absolute contributions from all but one of the industries
in which we were invested. However, several of our portfolio positions, most
notably diversified telecommunication services, lagged those of our custom
benchmark.
TOUGH CALLS IN TELECOM
Our investments in diversified telecom contributed most to total return during
the period but also hindered relative performance more than any other industry.
A combination of underweight positions and unfavorable security selection was to
blame.
Our largest underweights included the major diversified telecom services
providers, most of which posted double- or even triple-digit gains. Our
underweights in AT&T and BellSouth--the two largest positions in the custom
benchmark--hurt relative performance as both stocks rallied in advance of their
year-end merger. Though we're gradually increasing our exposure in the
diversified telecom industry, the change has been neither fast nor ample enough
to capture as much of that group's powerful performance as we would have liked.
Other telecom companies provided strong absolute performance, including
Beijing-based China Mobile, which finished the reporting period as our
top-contributing stock. The world's largest cell-phone operator by users, China
Mobile reported that it added a record number of new subscribers in November.
UTILITIES MARKET RETURNS
For the 12 months ended December 31, 2006
- --------------------------------------------------------------------------------
BROAD UTILITIES MARKET
- --------------------------------------------------------------------------------
Lipper Utility Fund Index 26.89%
- --------------------------------------------------------------------------------
Russell 1000 Utilities Index 30.57%
- --------------------------------------------------------------------------------
PRIMARY UTILITIES INDUSTRIES IN FUND BENCHMARK
- --------------------------------------------------------------------------------
Diversified Telecommunication Services 48.01%
- --------------------------------------------------------------------------------
Gas Utilities 30.07%
- --------------------------------------------------------------------------------
Independent Power Producers 25.38%
- --------------------------------------------------------------------------------
Electric Utilities 24.44%
- --------------------------------------------------------------------------------
Wireless Telecommunication Services 21.26%
- --------------------------------------------------------------------------------
Multi-Utilities 19.56%
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS
AS OF DECEMBER 31, 2006
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
12/31/06 6/30/06
- --------------------------------------------------------------------------------
Sempra Energy 4.6% 4.1%
- --------------------------------------------------------------------------------
AT&T Inc. 4.5% 3.8%
- --------------------------------------------------------------------------------
PG&E Corp. 4.3% 3.9%
- --------------------------------------------------------------------------------
Verizon
Communications Inc. 4.1% 3.2%
- --------------------------------------------------------------------------------
TXU Corp. 3.2% 4.6%
- --------------------------------------------------------------------------------
Constellation
Energy Group Inc. 2.7% 2.4%
- --------------------------------------------------------------------------------
FirstEnergy Corp. 2.6% 2.6%
- --------------------------------------------------------------------------------
Telefonica SA ADR 2.4% 1.6%
- --------------------------------------------------------------------------------
FPL Group, Inc. 2.3% 1.7%
- --------------------------------------------------------------------------------
AES Corp. (The) 2.2% 1.9%
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
**The Russell 1000 Utilities Index returned 5.93% and 6.84% for the 5- and
10-year periods ended December 31, 2006, respectively.
(continued)
Utilities - Portfolio Commentary
POWER COMPANIES ENERGIZED RELATIVE PERFORMANCE
Our positions in the multi-utilities and electric utilities industries
contributed most to performance against the benchmark, an outcome attributable
to effective security selection. One top stock was U.K.-based Scottish Power
plc, a non-benchmark holding that operates wind farms and supplies electricity
to more than five million homes and businesses.
Another U.K. success was National Grid plc, also a non-benchmark holding. One of
the world's largest utility companies, its profits increased 12% for the six
months ended September 30, 2006, driven in part by the performance of its U.S.
electricity and gas distribution business.
Favorable stock selection also yielded a top contributor in Oklahoma-based
natural gas utility ONEOK, which reported increased quarterly profits. The firm
also raised its 2007 earnings forecast, stating that a settlement in a Kansas
case will allow for rate increases in the months ahead.
STARTING POINT FOR THE NEXT REPORT PERIOD
After three straight years of outperforming the broad market, we are moderating
our expectations. We believe the valuations on electric utilities have become
increasingly stretched and that telecoms--which outperformed the broader market
by a significant margin in 2006--could continue to provide market leadership.
As of December 31, 2006, we had a moderately overweight position in the gas
utilities industry compared to that of our benchmark because our quantitative
process identified numerous opportunities in this area. Also, because our
quantitative system has ranked telecom stocks higher in recent months, we will
continue to bolster our position in the telecommunications sector, where we
remain significantly underweight.
INDUSTRY BREAKDOWN
AS OF DECEMBER 31, 2006
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
12/31/06 6/30/06
- --------------------------------------------------------------------------------
Multi-Utilities 26.6% 26.3%
- --------------------------------------------------------------------------------
Integrated Telecom.
Services 22.2% 19.8%
- --------------------------------------------------------------------------------
Electric Utilities 20.3% 21.4%
- --------------------------------------------------------------------------------
Independent Power
Producers &
Energy Traders 11.6% 9.0%
- --------------------------------------------------------------------------------
Gas Utilities 8.8% 8.3%
- --------------------------------------------------------------------------------
Wireless Telecom.
Services 7.4% 8.6%
- --------------------------------------------------------------------------------
Other Industries 2.4% 5.2%
- --------------------------------------------------------------------------------
Other Assets
and Liabilities(1) 0.7% 1.4%
- --------------------------------------------------------------------------------
(1) Includes temporary cash investments, collateral received for securities
lending and other assets and liabilities.
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
12/31/06 6/30/06
- --------------------------------------------------------------------------------
Domestic
Common Stocks 82.3% 82.0%
- --------------------------------------------------------------------------------
Foreign
Common Stocks(2) 17.0% 16.6%
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS 99.3% 98.6%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 1.5% 1.3%
- --------------------------------------------------------------------------------
Other Assets
and Liabilities(3) (0.8)% 0.1%
- --------------------------------------------------------------------------------
(2) Includes depositary shares, dual listed securities and foreign ordinary
shares.
(3) Includes collateral received for securities lending and other assets and
liabilities.
EXHIBIT D
FINANCIAL HIGHLIGHTS
The Financial Highlights itemize what contributed to the changes in share price
during the most recently ended fiscal year. They also show the changes in share
price for this period in comparison to changes over the last five fiscal years.
Except as noted below, the Financial Highlights have been audited by
PricewaterhouseCoopers LLP, independent registered public accounting firm. Their
Report of Independent Registered Public Accounting Firm and the financial
statements are included in the funds' annual reports, which are available upon
request.
ARIZONA MUNICIPAL BOND FUND
FLORIDA MUNICIPAL BOND FUND
Arizona Municipal Bond - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------------
INVESTOR CLASS
- -----------------------------------------------------------------------------------------------
2006(1) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------
PER-SHARE DATA
- -----------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.68 $10.96 $10.83 $11.40 $10.89 $10.69
- -----------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss) 0.22 0.42(2) 0.42 0.41 0.41 0.44
- --------------------------
Net Realized and
Unrealized Gain (Loss) 0.18 (0.25) 0.13 (0.53) 0.59 0.27
- -----------------------------------------------------------------------------------------------
Total From
Investment Operations 0.40 0.17 0.55 (0.12) 1.00 0.71
- -----------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.22) (0.43) (0.42) (0.41) (0.41) (0.44)
- --------------------------
From Net
Realized Gains -- (0.02) --(3) (0.04) (0.08) (0.07)
- -----------------------------------------------------------------------------------------------
Total Distributions (0.22) (0.45) (0.42) (0.45) (0.49) (0.51)
- -----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $10.86 $10.68 $10.96 $10.83 $11.40 $10.89
===============================================================================================
TOTAL RETURN(4) 3.77% 1.59% 5.21% (1.06)% 9.36% 6.74%
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.49%(5) 0.49% 0.50% 0.51% 0.51% 0.51%
- --------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets 4.06%(5) 3.89% 3.86% 3.70% 3.70% 4.04%
- --------------------------
Portfolio Turnover Rate 9% 44% 48% 26% 50% 77%
- --------------------------
Net Assets, End of Period
(in thousands) $53,609 $52,404 $53,203 $60,203 $75,787 $66,327
- -----------------------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount is less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not result
in any gain or loss of value between one class and another.
(5) Annualized.
Arizona Municipal Bond - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
A CLASS
- --------------------------------------------------------------------------------
2006(1) 2006 2005 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.68 $10.96 $10.83 $11.25
- --------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss) 0.20 0.39(3) 0.40 0.10
- ---------------------------------
Net Realized and
Unrealized Gain (Loss) 0.18 (0.25) 0.13 (0.42)
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.38 0.14 0.53 (0.32)
- --------------------------------------------------------------------------------
Distributions
- ---------------------------------
From Net Investment Income (0.20) (0.40) (0.40) (0.10)
- ---------------------------------
From Net Realized Gains -- (0.02) --(4) --
- --------------------------------------------------------------------------------
Total Distributions (0.20) (0.42) (0.40) (0.10)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.86 $10.68 $10.96 $10.83
================================================================================
TOTAL RETURN(5) 3.64% 1.34% 4.94% (2.87)%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 0.74%(6) 0.74% 0.75% 0.76%(6)
- ---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 3.81%(6) 3.64% 3.61% 3.63%(6)
- ---------------------------------
Portfolio Turnover Rate 9% 44% 48% 26%(7)
- ---------------------------------
Net Assets, End of Period
(in thousands) $1,769 $3,741 $4,271 $1,523
- --------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) February 27, 2004 (commencement of sale) through May 31, 2004.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount is less than $0.005.
(5) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not include any applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to two
decimal places. If net asset values were calculated to three decimal places,
the total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(6) Annualized.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended May 31, 2004.
Arizona Municipal Bond - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
B CLASS
- --------------------------------------------------------------------------------
2006(1) 2006 2005 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.68 $10.96 $10.83 $11.25
- --------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss) 0.16 0.36(3) 0.32 0.08
- ---------------------------------
Net Realized and
Unrealized Gain (Loss) 0.18 (0.30) 0.13 (0.42)
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.34 0.06 0.45 (0.34)
- --------------------------------------------------------------------------------
Distributions
- ---------------------------------
From Net Investment Income (0.16) (0.32) (0.32) (0.08)
- ---------------------------------
From Net Realized Gains -- (0.02) --(4) --
- --------------------------------------------------------------------------------
Total Distributions (0.16) (0.34) (0.32) (0.08)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.86 $10.68 $10.96 $10.83
================================================================================
TOTAL RETURN(5) 3.25% 0.61% 4.19% (3.06)%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.49%(6) 1.49% 1.50% 1.51%(6)
- ---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 3.06%(6) 2.89% 2.86% 2.88%(6)
- ---------------------------------
Portfolio Turnover Rate 9% 44% 48% 26%(7)
- ---------------------------------
Net Assets, End of Period
(in thousands) $43 $42 $3 $2
- --------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) February 27, 2004 (commencement of sale) through May 31, 2004.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount is less than $0.005.
(5) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not include any applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to two
decimal places. If net asset values were calculated to three decimal places,
the total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(6) Annualized.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated was
calculated for the year ended May 31, 2004.
Arizona Municipal Bond - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
C CLASS
- --------------------------------------------------------------------------------
2006(1) 2006 2005 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.68 $10.96 $10.83 $11.25
- --------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss) 0.16 0.30(3) 0.31 0.08
- ---------------------------------
Net Realized and
Unrealized Gain (Loss) 0.18 (0.24) 0.13 (0.42)
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.34 0.06 0.44 (0.34)
- --------------------------------------------------------------------------------
Distributions
- ---------------------------------
From Net Investment Income (0.16) (0.32) (0.31) (0.08)
- ---------------------------------
From Net Realized Gains -- (0.02) --(4) --
- --------------------------------------------------------------------------------
Total Distributions (0.16) (0.34) (0.31) (0.08)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.86 $10.68 $10.96 $10.83
================================================================================
TOTAL RETURN(5) 3.25% 0.58% 4.15% (3.06)%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.49%(6) 1.49% 1.50% 1.51%(6)
- ---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 3.06%(6) 2.89% 2.86% 2.88%(6)
- ---------------------------------
Portfolio Turnover Rate 9% 44% 48% 26%(7)
- ---------------------------------
Net Assets, End of Period
(in thousands) $534 $382 $719 $12
- --------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) February 27, 2004 (commencement of sale) through May 31, 2004.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount is less than $0.005.
(5) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not include any applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to two
decimal places. If net asset values were calculated to three decimal places,
the total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(6) Annualized.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated was
calculated for the year ended May 31, 2004.
Florida Municipal Bond - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------------
INVESTOR CLASS
- -----------------------------------------------------------------------------------------------
2006(1) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------
PER-SHARE DATA
- -----------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.55 $10.81 $10.68 $11.29 $10.73 $10.67
- -----------------------------------------------------------------------------------------------
Income From
Investment Operations
- --------------------------
Net Investment
Income (Loss) 0.22 0.42 0.39 0.42 0.42 0.44
- --------------------------
Net Realized and
Unrealized Gain (Loss) 0.16 (0.26) 0.13 (0.56) 0.62 0.19
- -----------------------------------------------------------------------------------------------
Total From
Investment Operations 0.38 0.16 0.52 (0.14) 1.04 0.63
- -----------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.22) (0.42) (0.39) (0.42) (0.42) (0.44)
- --------------------------
From Net
Realized Gains -- -- -- (0.05) (0.06) (0.13)
- -----------------------------------------------------------------------------------------------
Total Distributions (0.22) (0.42) (0.39) (0.47) (0.48) (0.57)
- -----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $10.71 $10.55 $10.81 $10.68 $11.29 $10.73
===============================================================================================
TOTAL RETURN(2) 3.62% 1.48% 4.88% (1.30)% 9.90% 5.98%
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.49%(3) 0.49% 0.50% 0.51% 0.51% 0.51%
- --------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets 4.11%(3) 3.90% 3.56% 3.82% 3.78% 4.03%
- --------------------------
Portfolio Turnover Rate 34% 28% 44% 59% 45% 75%
- --------------------------
Net Assets, End of Period
(in thousands) $38,211 $40,604 $49,451 $63,142 $70,078 $54,565
- -----------------------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) Total return assumes reinvestment of net investment income and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not result
in any gain or loss of value between one class and another.
(3) Annualized.
Florida Municipal Bond - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
A CLASS
- --------------------------------------------------------------------------------
2006(1) 2006 2005 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.55 $10.81 $10.68 $11.11
- --------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss) 0.21 0.39 0.36 0.09
- ---------------------------------
Net Realized and
Unrealized Gain (Loss) 0.16 (0.26) 0.13 (0.43)
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.37 0.13 0.49 (0.34)
- --------------------------------------------------------------------------------
Distributions
- ---------------------------------
From Net Investment Income (0.21) (0.39) (0.36) (0.09)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.71 $10.55 $10.81 $10.68
================================================================================
TOTAL RETURN(3) 3.49% 1.23% 4.62% (3.10)%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 0.74%(4) 0.74% 0.75% 0.76%(4)
- ---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 3.86%(4) 3.65% 3.31% 3.34%(4)
- ---------------------------------
Portfolio Turnover Rate 34% 28% 44% 59%(5)
- ---------------------------------
Net Assets, End of Period
(in thousands) $1,066 $1,380 $2,105 $761
- --------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) February 27, 2004 (commencement of sale) through May 31, 2004.
(3) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not include any applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to two
decimal places. If net asset values were calculated to three decimal places,
the total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(4) Annualized.
(5) Portfolio turnover is calculated at the fund level. Percentage indicated was
calculated for the year ended May 31, 2004.
Florida Municipal Bond - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
B CLASS
- --------------------------------------------------------------------------------
2006(1) 2006 2005 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.55 $10.81 $10.68 $11.11
- --------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss) 0.17 0.31 0.28 0.07
- ---------------------------------
Net Realized and
Unrealized Gain (Loss) 0.16 (0.26) 0.13 (0.43)
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.33 0.05 0.41 (0.36)
- --------------------------------------------------------------------------------
Distributions
- ---------------------------------
From Net Investment Income (0.17) (0.31) (0.28) (0.07)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.71 $10.55 $10.81 $10.68
================================================================================
TOTAL RETURN(3) 3.11% 0.47% 3.83% (3.28)%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.49%(4) 1.49% 1.50% 1.51%(4)
- ---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 3.11%(4) 2.90% 2.56% 2.59%(4)
- ---------------------------------
Portfolio Turnover Rate 34% 28% 44% 59%(5)
- ---------------------------------
Net Assets, End of Period
(in thousands) $16 $15 $19 $17
- --------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) February 27, 2004 (commencement of sale) through May 31, 2004.
(3) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not include any applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to two
decimal places. If net asset values were calculated to three decimal places,
the total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(4) Annualized.
(5) Portfolio turnover is calculated at the fund level. Percentage indicated was
calculated for the year ended May 31, 2004.
Florida Municipal Bond - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MAY 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
C CLASS
- --------------------------------------------------------------------------------
2006(1) 2006 2005 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.55 $10.81 $10.68 $11.11
- --------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss) 0.17 0.31 0.28 0.07
- ---------------------------------
Net Realized and
Unrealized Gain (Loss) 0.16 (0.26) 0.13 (0.43)
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.33 0.05 0.41 (0.36)
- --------------------------------------------------------------------------------
Distributions
- ---------------------------------
From Net Investment Income (0.17) (0.31) (0.28) (0.07)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.71 $10.55 $10.81 $10.68
================================================================================
TOTAL RETURN(3) 3.11% 0.47% 3.84% (3.28)%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.49%(4) 1.49% 1.50% 1.51%(4)
- ---------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 3.11%(4) 2.90% 2.56% 2.59%(4)
- ---------------------------------
Portfolio Turnover Rate 34% 28% 44% 59%(5)
- ---------------------------------
Net Assets, End of Period
(in thousands) $1,182 $1,570 $1,827 $1,032
- --------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) February 27, 2004 (commencement of sale) through May 31, 2004.
(3) Total return assumes reinvestment of net investment income and capital gains
distributions, if any, and does not include any applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to two
decimal places. If net asset values were calculated to three decimal places,
the total return differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal places is
made in accordance with SEC guidelines and does not result in any gain or
loss of value between one class and another.
(4) Annualized.
(5) Portfolio turnover is calculated at the fund level. Percentage indicated was
calculated for the year ended May 31, 2004.
TAX-FREE BOND FUND
Tax-Free Bond - Financial Highlights
For a Share Outstanding Throughout the Years Ended May 31 (except as noted)
- ---------------------------------------------------------------------------------------------------------
INVESTOR CLASS
- ---------------------------------------------------------------------------------------------------------
2006(1) 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- ---------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.67 $10.88 $10.71 $11.19 $10.63 $10.50
- ---------------------------------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------
Net Investment Income (Loss) 0.21 0.40 0.38 0.37 0.39 0.44
- ---------------------------------
Net Realized and Unrealized
Gain (Loss) 0.20 (0.20) 0.17 (0.45) 0.58 0.22
- ---------------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.41 0.20 0.55 (0.08) 0.97 0.66
- ---------------------------------------------------------------------------------------------------------
Distributions
- ---------------------------------
From Net Investment Income (0.21) (0.40) (0.38) (0.37) (0.39) (0.44)
- ---------------------------------
From Net Realized Gains -- (0.01) -- (0.03) (0.02) (0.09)
- ---------------------------------------------------------------------------------------------------------
Total Distributions (0.21) (0.41) (0.38) (0.40) (0.41) (0.53)
- ---------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.87 $10.67 $10.88 $10.71 $11.19 $10.63
=========================================================================================================
TOTAL RETURN(2) 3.88% 1.87% 5.16% (0.79)% 9.31% 6.45%
- ---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 0.49%(3) 0.49% 0.50% 0.51% 0.51% 0.51%
- ---------------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets 3.89%(3) 3.73% 3.46% 3.34% 3.62% 4.14%
- ---------------------------------
Portfolio Turnover Rate 27% 79% 77% 60% 57% 86%
- ---------------------------------
Net Assets, End of Period
(in thousands) $631,398 $665,458 $610,420 $583,689 $620,000 $382,447
- ---------------------------------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect
the class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not
result in any gain or loss of value between one class and another.
(3) Annualized.
Tax-Free Bond - Financial Highlights
For a Share Outstanding Throughout the Periods Indicated
- --------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------
2006(1) 2006(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.67 $10.83
- --------------------------------------------------------------------------------
Income From Investment Operations
- ----------------------------------------
Net Investment Income (Loss) 0.20 0.31
- ----------------------------------------
Net Realized and
Unrealized Gain (Loss) 0.20 (0.15)
- --------------------------------------------------------------------------------
Total From Investment Operations 0.40 0.16
- --------------------------------------------------------------------------------
Distributions
- ----------------------------------------
From Net Investment Income (0.20) (0.31)
- ----------------------------------------
From Net Realized Gains -- (0.01)
- --------------------------------------------------------------------------------
Total Distributions (0.20) (0.32)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.87 $10.67
================================================================================
TOTAL RETURN(3) 3.75% 1.51%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 0.74%(4) 0.74%(4)
- ----------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 3.64%(4) 3.52%(4)
- ----------------------------------------
Portfolio Turnover Rate 27% 79%(5)
- ----------------------------------------
Net Assets, End of Period (in thousands) $337 $25
- --------------------------------------------------------------------------------
(1) Six months ended November 30, 2006 (unaudited).
(2) July 29, 2005 (commencement of sale) through May 31, 2006.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not result
in any gain or loss of value between one class and another.
(4) Annualized.
(5) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended May 31, 2006.
STATEMENT OF ADDITIONAL INFORMATION
April 3, 2007
REORGANIZATION OF
AMERICAN CENTURY ARIZONA MUNICIPAL BOND FUND AND
AMERICAN CENTURY FLORIDA MUNICIPAL BOND FUND
EACH, A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST
IN EXCHANGE FOR INVESTOR CLASS SHARES OF
AMERICAN CENTURY TAX-FREE BOND FUND
A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST
AND THE
RECLASSIFICATION OF ADVISOR CLASS SHARES OF THE FOLLOWING FUNDS AS INVESTOR
CLASS SHARES OF THE SAME FUNDS:
AMERICAN CENTURY TAX-FREE BOND FUND
A SERIES OF AMERICAN CENTURY MUNICIPAL TRUST
AND
AMERICAN CENTURY UTILITIES FUND
A SERIES OF AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.
Each fund has the following address:
4500 Main Street
Kansas City, Missouri 64111
Telephone No.: 1-877-345-8836
This Statement of Additional Information dated April 3, 2007, is not a
prospectus. A Proxy Statement and Prospectus dated April 3, 2007, related to the
above-referenced matters may be obtained from American Century Funds, on behalf
of the funds listed above, by writing or calling American Century Funds at the
address and telephone number shown above. This Statement of Additional
Information should be read in conjunction with such Proxy Statement and
Prospectus.
TABLE OF CONTENTS
1. The statement of additional information for Tax-Free Bond, Arizona
Municipal Bond and Florida Municipal Bond, each a series of American
Century Municipal Trust, dated October 1, 2006.
2. The statement of additional information for Utilities, a series of American
Century Quantitative Equity Funds, Inc., dated November 30, 2006.
3. Audited Financial Statements of Tax-Free Bond, a series of American Century
Municipal Trust, dated May 31, 2006.
4. Audited Financial Statements of Arizona Municipal Bond and Florida
Municipal Bond, each a series of American Century Municipal Trust, dated
May 31, 2006.
5. Audited Financial Statements of Utilities, a series of American Century
Quantitative Equity Funds, Inc., dated December 31, 2006.
6. Unaudited Financial Statements of Tax-Free Bond, a series of American
Century Municipal Trust, dated November 30, 2006.
7. Unaudited Financial Statements of Arizona Municipal Bond and Florida
Municipal Bond, each a series of American Century Municipal Trust, dated
November 30, 2006.
8. Pro Forma Financial Statements of Arizona Municipal Bond and Tax-Free Bond
combined.
9. Pro Forma Financial Statements of Florida Municipal Bond and Tax-Free Bond
combined.
10. Pro Forma Financial Statements of Arizona Municipal Bond, Florida Municipal
Bond and Tax-Free Bond.
INFORMATION INCORPORATED BY REFERENCE
The combined statement of additional information for Tax-Free Bond, Arizona
Municipal Bond and Florida Municipal Bond, each a series of American Century
Municipal Trust, dated October 1, 2006, as supplemented January 26, 2007, is
incorporated by reference to American Century Municipal Trust's Post-Effective
Amendment No. 51 to its Registration Statement on Form N-1A (File No. 811-04025)
which was filed with the Securities and Exchange Commission on or about
September 28, 2006.
A statement of additional information for Utilities, a series of American
Century Quantitative Equity Funds, Inc., dated November 30, 2006, is
incorporated by reference to American Century Quantitative Equity Funds, Inc.'s
Post-Effective Amendment No. 46 to its Registration Statement on Form N-1A (File
No. 811-05447) which was filed with the Securities and Exchange Commission on or
about November 29, 2006.
Audited Financial Statements of Tax-Free Bond, a series of American Century
Municipal Trust, dated May 31, 2006, are incorporated by reference to the fund's
Annual Report to shareholders, which was filed with the Securities and Exchange
Commission pursuant to Section 30(b) of the Investment Company Act of 1940, as
amended, on or about August 4, 2006.
Audited Financial Statements of Arizona Municipal Bond and Florida Municipal
Bond, each a series of American Century Municipal Trust, dated May 31, 2006, are
incorporated by reference to the funds' Annual Report to shareholders, which was
filed with the Securities and Exchange Commission pursuant to Section 30(b) of
the Investment Company Act of 1940, as amended, on or about August 4, 2006.
Audited Financial Statements of Utilities, a series of American Century
Quantitative Equity Funds, Inc., dated December 31, 2006, are incorporated by
reference to the fund's Annual Report to shareholders, which was filed with the
Securities and Exchange Commission pursuant to Section 30(b) of the Investment
Company Act of 1940, as amended, on or about March 9, 2007.
Unaudited Financial Statements of Tax-Free Bond, a series of American Century
Municipal Trust, dated November 30, 2006, are incorporated by reference to the
fund's Semiannual Report to shareholders, which was filed with the Securities
and Exchange Commission pursuant to Section 30(b) of the Investment Company Act
of 1940, as amended, on or about February 1, 2007.
Unaudited Financial Statements of Arizona Municipal Bond and Florida Municipal
Bond, each a series of American Century Municipal Trust, dated November 30,
2006, are incorporated by reference to the fund's Semiannual Report to
shareholders, which was filed with the Securities and Exchange Commission
pursuant to Section 30(b) of the Investment Company Act of 1940, as amended, on
or about February 1, 2007.
References to the above-listed documents include any supplements to such
documents in effect as of the date of the related Proxy Statement/Prospectus.
Arizona Municipal ("Fund 1") / Florida Municipal ("Fund 2") / Tax-Free Bond ("Fund 3")
PROFORMA COMBINED SCHEDULE OF INVESTMENTS November 30, 2006
(Unaudited)
FUND 1 FUND 2 FUND 3 COMBINED FUND 1 FUND 2 FUND 3 COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET MARKET
AMOUNT AMOUNT AMOUNT AMOUNT SECURITY DESCRIPTION RATE MAT. DATE VALUE VALUE VALUE VALUE
- ----------------------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL SECURITIES - 98.8%
ALABAMA - 0.8%
- - $ 865,000 $ 865,000 Alabama Water Pollution Control 5.75% 8/15/2018 - - $ 931,891 $ 931,891
Auth. GO (Ambac)(1)
- - 190,000 190,000 East Central Industrial 5.25% 9/1/2008 - - 195,611 195,611
Development Auth. Rev.,
Prerefunded at 100% of Par
(Ambac)(2)
- - 810,000 810,000 East Central Industrial 5.25% 9/1/2013 - - 832,874 832,874
Development Auth. Rev. (Ambac)
- - 1,035,000 1,035,000 Helena Utilities Board Rev. 5.75% 4/1/2020 - - 1,148,260 1,148,260
(MBIA)
- - 790,000 790,000 Helena Utilities Board Rev. 5.75% 4/1/2022 - - 873,819 873,819
(MBIA)
- - 840,000 840,000 Helena Utilities Board Rev., 5.75% 4/1/2012 - - 936,247 936,247
Prerefunded at 101% of Par
(MBIA)(2)
- - 645,000 645,000 Helena Utilities Board Rev., 5.75% 4/1/2012 - - 718,904 718,904
Prerefunded at 101% of Par
(MBIA)(2)
-------------------------------------------------
- - 5,637,606 5,637,606
=================================================
ALASKA - 0.2%
- - 1,125,000 1,125,000 Borough of Aleutians East Rev., 5.00% 6/1/2020 - - 1,180,980 1,180,980
(Aleutian Pribilof Islands Inc.) =================================================
(ACA)
ARIZONA - 11.5%
$1,000,000 - 935,000 1,935,000 Arizona Board of Regents COP, 5.00% 6/1/2018 $1,095,890 - 1,024,657 2,120,547
Series 2006 A, (University of
Arizona) (Ambac)
- - 1,275,000 1,275,000 Arizona Health Facilities Auth. 4.00% 4/1/2012 - - 1,279,080 1,279,080
Rev., (Blood Systems
Incorporated)
- - 1,175,000 1,175,000 Arizona Health Facilities Auth. 4.50% 4/1/2016 - - 1,203,717 1,203,717
Rev., (Blood Systems
Incorporated)
1,000,000 - - 1,000,000 Arizona Health Facilities Auth. 5.00% 4/1/2021 1,044,230 - - 1,044,230
Rev., (Blood Systems
Incorporated)
1,750,000 - - 1,750,000 Arizona School Facilities Board 5.50% 7/1/2011 1,894,358 - - 1,894,358
Rev., (State School Improvement),
Prerefunded at 100% of Par(2)
1,000,000 - - 1,000,000 Arizona Student Loan Acquisition 5.65% 5/1/2014 1,067,860 - - 1,067,860
Auth. Rev., Series 1999 A1,
(Guaranteed Student Loans)
- - 1,000,000 1,000,000 Arizona Tourism & Sports Auth. 5.00% 7/1/2011 - - 1,039,150 1,039,150
Rev., (Baseball Training
Facilities)
- - 1,000,000 1,000,000 Arizona Tourism & Sports Auth. 5.00% 7/1/2012 - - 1,044,240 1,044,240
Rev., (Baseball Training
Facilities)
- - 2,000,000 2,000,000 Arizona Tourism & Sports Auth. 5.25% 7/1/2017 - - 2,181,500 2,181,500
Rev., Series 2003 A,
(Multipurpose Stadium Facility)
(MBIA)
1,880,000 - - 1,880,000 Arizona Tourism & Sports Auth. 5.00% 7/1/2013 1,970,654 - - 1,970,654
Tax Rev., (Baseball Training
Facilities)(1)
- - 2,130,000 2,130,000 Energy Management Services LLC 4.50% 7/1/2012 - - 2,236,607 2,236,607
Rev., (Arizona State University -
Main Campus) (MBIA)
1,910,000 - - 1,910,000 Energy Management Services LLC 4.50% 7/1/2011 1,991,462 - - 1,991,462
Rev., (Arizona State University -
Main Campus) (MBIA)(1)
- - 340,000 340,000 Gilbert Water Resource Municipal 4.25% 4/1/2011 - - 338,983 338,983
Property Corp. Rev.
1,000,000 - 3,000,000 4,000,000 Gilbert Water Resource Municipal 4.90% 4/1/2019 1,018,340 - 3,055,020 4,073,360
Property Corp. Rev., (Development
Fee & Sub-Lien)
540,000 - - 540,000 Glendale Industrial Development 5.375% 5/15/2028 555,077 - - 555,077
Auth. Rev., Series 1998 A,
(Midwestern University)
460,000 - - 460,000 Glendale Industrial Development 5.375% 5/15/2008 476,555 - - 476,555
Auth. Rev., Series 1998 A,
(Midwestern University),
Prerefunded at 101% of Par(2)
500,000 - - 500,000 Glendale Industrial Development 5.75% 5/15/2021 540,120 - - 540,120
Auth. Rev., Series 2001 A,
(Midwestern University)
1,740,000 - - 1,740,000 Greater Arizona Development Auth. 5.00% 8/1/2023 1,873,580 - - 1,873,580
Rev., Series 2005 A (MBIA)(1)
- - 1,155,000 1,155,000 Maricopa County Gilbert Unified 5.75% 7/1/2011 - - 1,264,956 1,264,956
School District No. 41 GO (FSA)
1,040,000 - - 1,040,000 Maricopa County Kyrene Elementary 4.30% 7/1/2007 1,018,774 - - 1,018,774
School District No. 28 GO, Series
2001 B (MBIA)(4)
1,615,000 - - 1,615,000 Maricopa County Litchfield 4.55% 7/1/2007 1,623,915 - - 1,623,915
Elementary School District No. 79
GO, Series 2000 A, (Projects of
1998) (FSA)
1,000,000 - - 1,000,000 Maricopa County Peoria Unified 5.00% 7/1/2024 1,085,990 - - 1,085,990
School District No. 11 GO,
(School Improvement) (MBIA)
1,000,000 - - 1,000,000 Maricopa County Phoenix 5.50% 7/1/2007 1,021,240 - - 1,021,240
Elementary School District No. 1
GO, Prerefunded at 101% of Par
(MBIA)(2)
1,445,000 - - 1,445,000 Maricopa County Phoenix Union 4.75% 7/1/2011 1,521,816 - - 1,521,816
High School District No. 210 GO
(FSA)
- - 2,415,000 2,415,000 Maricopa County Saddle Mountain 5.25% 7/1/2011 - - 2,540,773 2,540,773
Unified School District No. 90
GO, Series 2003 A
- - 2,000,000 2,000,000 Maricopa County Saddle Mountain 5.25% 7/1/2012 - - 2,119,360 2,119,360
Unified School District No. 90
GO, Series 2003 A
1,955,000 - - 1,955,000 Maricopa County Saddle Mountain 5.00% 7/1/2010 2,021,293 - - 2,021,293
Unified School District No. 90
GO, Series 2003 A(1)
1,000,000 - - 1,000,000 Maricopa County Scottsdale 6.60% 7/1/2012 1,154,100 - - 1,154,100
Elementary School District No.
48 GO
1,000,000 - - 1,000,000 Maricopa County Scottsdale 4.00% 7/1/2016 1,025,220 - - 1,025,220
Unified School District No. 48
GO, Series 2006 B (FSA)
1,265,000 - - 1,265,000 Mohave County Community College 5.75% 3/1/2014 1,348,427 - - 1,348,427
District COP (Ambac)
1,150,000 - 1,000,000 2,150,000 Mohave County Community College 6.00% 3/1/2020 1,233,387 - 1,072,510 2,305,897
District Rev., (State Board of
Directors) (MBIA)
- - 2,155,000 2,155,000 Mohave County Industrial 5.00% 4/1/2014 - - 2,334,878 2,334,878
Development Auth. GO, Series 2004
A, (Mohave Prison) (XLCA)
1,815,000 - - 1,815,000 Navajo County Unified School 5.00% 7/1/2017 2,014,177 - - 2,014,177
District No. 20 Rev., Series 2006
A (MBIA)(1)
1,000,000 - - 1,000,000 Phoenix Civic Improvement Corp. 5.00% 7/1/2021 1,083,750 - - 1,083,750
Rev., (Junior Lien) (MBIA)
1,000,000 - - 1,000,000 Phoenix Civic Improvement Corp. 5.50% 7/1/2019 1,092,960 - - 1,092,960
Water System Rev., (Junior Lien)
(FGIC)
1,000,000 - - 1,000,000 Phoenix Civic Improvement Corp. 6.25% 7/1/2010 1,099,830 - - 1,099,830
Water System Rev., (Junior Lien),
Prerefunded at 101% of Par
(FGIC)(2)
1,070,000 - - 1,070,000 Phoenix GO, Series 1995 A 6.25% 7/1/2017 1,309,787 - - 1,309,787
240,000 - - 240,000 Phoenix Industrial Development 6.60% 12/1/2029 246,053 - - 246,053
Auth. Single Family Mortgage
Rev., Series 1998 A
(GNMA/FNMA/FHLMC)
- - 1,200,000 1,200,000 Pima County Indian 4.60% 7/1/2013 - - 1,263,612 1,263,612
Oasis-Baboquivari Unified School
District No. 40 GO, Series 2002
A (MBIA)
1,710,000 - - 1,710,000 Pima County Metropolitan Domestic 5.25% 7/1/2018 1,951,794 - - 1,951,794
Water Improvement District Rev.
(Ambac)(1)
1,800,000 - - 1,800,000 Pima County Metropolitan Domestic 5.25% 7/1/2019 2,067,875 - - 2,067,875
Water Improvement District Rev.
(Ambac)(1)
- - 2,600,000 2,600,000 Pima County Tucson Unified 4.625% 7/1/2013 - - 2,745,158 2,745,158
School District No. 1 GO (FSA)
1,125,000 - - 1,125,000 Pima County Unified School 5.50% 7/1/2015 1,204,988 - - 1,204,988
District No. 6 Marana GO (FGIC)
- - 3,970,000 3,970,000 Pinal County COP 5.00% 12/1/2025 - - 4,171,597 4,171,597
1,000,000 - - 1,000,000 Pinal County COP 5.00% 12/1/2026 1,050,780 - - 1,050,780
820,000 - - 820,000 Pinal County COP (Ambac) 4.75% 6/1/2013 864,985 - - 864,985
1,100,000 - - 1,100,000 Pinal County Unified School 5.00% 7/1/2023 1,188,781 - - 1,188,781
District No. 43 Apache Junction
GO, Series 2005 A, (School
Improvement) (MBIA)
775,000 - - 775,000 Pinal County Unified School 5.00% 7/1/2024 842,293 - - 842,293
District No. 43 Apache Junction
GO, Series 2006 B, (School
Improvement) (FGIC)
- - 1,000,000 1,000,000 Queen Creek Improvement District 5.00% 1/1/2016 - - 1,036,610 1,036,610
No. 1 Special Tax Rev.
1,000,000 - - 1,000,000 Queen Creek Improvement District 5.00% 1/1/2011 1,045,570 - - 1,045,570
No. 1 Special Tax Rev.
1,600,000 - - 1,600,000 Scottsdale GO, Prerefunded at 6.25% 7/1/2009 1,707,632 - - 1,707,632
100% of Par(2)
1,000,000 - - 1,000,000 Sedona COP, Prerefunded at 101% 5.75% 7/1/2009 1,063,890 - - 1,063,890
of Par(2)
- - 3,085,000 3,085,000 South Tucson Municipal Property 5.50% 6/1/2024 - - 3,235,733 3,235,733
Corp. Rev.
1,645,000 - - 1,645,000 University of Arizona COP, 5.50% 6/1/2017 1,794,202 - - 1,794,202
Series 2002 A (Ambac)
500,000 - - 500,000 University of Arizona COP, 5.00% 6/1/2024 537,045 - - 537,045
Series 2005 B (Ambac)
725,000 - - 725,000 Westpark Community Facility 5.25% 7/15/2031 739,500 - - 739,500
District GO
-----------------------------------------------
49,488,180 - 35,188,141 84,676,321
===============================================
CALIFORNIA - 4.0%
- - 7,500,000 7,500,000 California GO(1) 5.00% 6/1/2026 - - 7,999,872 7,999,872
- - 1,000,000 1,000,000 California Public Works Board 6.20% 10/1/2008 - - 1,001,930 1,001,930
Lease COP, Series 1994 A,
(Various University of California
Projects)
- - 1,000,000 1,000,000 California Statewide Communities 4.70% 6/1/2009 - - 1,024,540 1,024,540
Auth. Rev., Series 2002 E,
(Kaiser Permanente)
- - 1,075,000 1,075,000 California Statewide Communities 5.00% 10/1/2012 - - 1,161,462 1,161,462
Development Auth. Water & Waste
Rev., Series 2004 A, (Pooled
Financing Program) (FSA)
- - 2,000,000 2,000,000 California Statewide Communities 5.25% 10/1/2019 - - 2,197,120 2,197,120
Development Auth. Water & Waste
Rev., Series 2004 A, (Pooled
Financing Program) (FSA)(1)
- - 3,000,000 3,000,000 Imperial Irrigation District COP, 5.50% 7/1/2029 - - 3,247,140 3,247,140
(Water Systems) (Ambac)
- - 2,200,000 2,200,000 Manteca Unified School District 5.25% 8/1/2014 - - 2,463,494 2,463,494
GO, Prerefunded at 100% of Par
(FSA)(2)
- - 1,000,000 1,000,000 Plumas Unified School District 5.25% 8/1/2020 - - 1,149,390 1,149,390
GO (FSA)
- - 2,145,000 2,145,000 San Francisco Uptown Parking 5.50% 7/1/2015 - - 2,341,246 2,341,246
Corporation Rev., (Union Square)
(MBIA)
- - 1,000,000 1,000,000 San Francisco Uptown Parking 6.00% 7/1/2020 - - 1,114,190 1,114,190
Corporation Rev., (Union Square)
(MBIA)
- - 2,000,000 2,000,000 San Francisco Uptown Parking 6.00% 7/1/2031 - - 2,210,020 2,210,020
Corporation Rev., (Union Square)
(MBIA)
- - 1,575,000 1,575,000 San Marcos Public Facilities 5.00% 8/1/2020 - - 1,723,334 1,723,334
Auth. Tax Allocation Rev., Series
2006 A (Project Area No. 3)
(Ambac)
- - 2,055,000 2,055,000 Westlands Water District COP, 5.00% 9/1/2024 - - 2,197,370 2,197,370
Series 2005 A (MBIA)
-----------------------------------------------
- - 29,831,108 29,831,108
===============================================
COLORADO - 2.4%
- - 1,100,000 1,100,000 Arapahoe County Water & 5.75% 12/1/2017 - - 1,225,081 1,225,081
Wastewater Public Improvement
District GO, Series 2002 B (MBIA)
- - 530,000 530,000 Colorado Educational & Cultural 4.50% 11/1/2009 - - 531,489 531,489
Facilities Auth. Rev.,
(University Facilities-Northwest
Nazarene)
- - 900,000 900,000 Colorado Educational & Cultural 4.75% 11/1/2010 - - 912,330 912,330
Facilities Auth. Rev.,
(University Facilities-Northwest
Nazarene)
- - 800,000 800,000 Colorado Educational & Cultural 4.60% 11/1/2016 - - 799,656 799,656
Facilities Auth. Rev.,
(University Facilities-Northwest
Nazarene)
- - 1,000,000 1,000,000 Colorado Health Facilities Auth. 5.25% 6/1/2020 - - 1,075,890 1,075,890
Rev., (The Evangelical Lutheran
Good Samaritan Society)
- - 1,300,000 1,300,000 Colorado Health Facilities Auth. 5.25% 6/1/2021 - - 1,396,564 1,396,564
Rev., (The Evangelical Lutheran
Good Samaritan Society)
- - 500,000 500,000 Colorado Health Facilities Auth. 4.00% 1/15/2007 - - 500,055 500,055
Rev., (Vail Valley Medical
Center)
- - 335,000 335,000 Colorado Health Facilities Auth. 4.50% 1/15/2009 - - 338,980 338,980
Rev., (Vail Valley Medical
Center)
- - 50,000 50,000 Colorado Water Resources & Power 6.25% 9/1/2016 - - 54,738 54,738
Development Auth. Rev., Series
2000 A
- - 450,000 450,000 Colorado Water Resources & Power 6.25% 9/1/2010 - - 492,890 492,890
Development Auth. Rev., Series
2000 A, Prerefunded at 100% of
Par(2)
- - 1,430,000 1,430,000 Denver West Metropolitan 5.25% 12/1/2024 - - 1,485,026 1,485,026
District GO
- - 1,000,000 1,000,000 Douglas & Elbert Counties School 5.75% 12/15/2012 - - 1,118,960 1,118,960
District No. Re-1 GO, Series
2002 B, Prerefunded at 100% of
Par (FSA/State Aid
Withholding)(2)
- - 1,100,000 1,100,000 Eagle Bend Metropolitan District 5.25% 12/1/2023 - - 1,176,670 1,176,670
No. 2 GO (RADIAN)
- - 1,020,000 1,020,000 El Paso County School District 4.25% 12/15/2013 - - 1,051,069 1,051,069
No 8 & Fountain-Fort Carson
School District Finance Corp.
COP (Ambac)
- - 5,000,000 5,000,000 University of Colorado Regents 6.00% 12/1/2022 - - 5,453,500 5,453,500
COP (MBIA-IBC)(1) -----------------------------------------------
- - 17,612,898 17,612,898
===============================================
CONNECTICUT - 1.7%
- - 2,150,000 2,150,000 City of Bridgeport GO, Series 5.25% 8/15/2014 - - 2,396,003 2,396,003
2004 A, Prerefunded at 100% of
Par (MBIA)(1)(2)
- - 5,000,000 5,000,000 Connecticut GO, Series 2006 C 5.00% 6/1/2014 - - 5,469,400 5,469,400
- - 2,595,000 2,595,000 Connecticut GO, Series 2006 D 5.00% 1/1/2015 - - 2,867,501 2,867,501
- - 2,000,000 2,000,000 Connecticut GO, Series 2006 D 5.00% 11/1/2026 - - 2,183,780 2,183,780
-----------------------------------------------
- - 12,916,684 12,916,684
===============================================
DISTRICT OF COLUMBIA - 0.4%
- - 1,385,000 1,385,000 District of Columbia GO, Series 5.50% 6/1/2009 - - 1,449,638 1,449,638
1999 B (FSA)
- - 1,155,000 1,155,000 District of Columbia Rev., 5.20% 7/1/2012 - - 1,210,151 1,210,151
(Gonzaga College High School) -----------------------------------------------
(FSA) - - 2,659,789 2,659,789
===============================================
FLORIDA - 5.2%
- $1,110,000 - 1,110,000 Broward County Airport Systems 5.25% 10/1/2012 - $1,146,386 - 1,146,386
Rev., (Passenger Facility),
(Conventional Lien H-1) (Ambac)
- 400,000 - 400,000 Broward County Educational 5.00% 4/1/2014 - 422,848 - 422,848
Facilities Auth. Rev., Series
2004 B, (Nova Southeastern)
- 500,000 - 500,000 Broward County Educational 5.50% 4/1/2015 - 542,285 - 542,285
Facilities Auth. Rev., Series
2004 B, (Nova Southeastern)
- 525,000 - 525,000 Broward County Educational 5.50% 4/1/2016 - 568,192 - 568,192
Facilities Auth. Rev., Series
2004 B, (Nova Southeastern)
- 500,000 - 500,000 Broward County School Board COP, 5.375% 7/1/2011 - 538,620 - 538,620
Series 2002 B, Prerefunded at
100% of Par (FSA)(2)
- 1,000,000 - 1,000,000 Callaway/Bay County Wastewater 5.00% 9/1/2023 - 1,069,820 - 1,069,820
System Rev. (MBIA)
- 1,475,000 - 1,475,000 Collier County School Board COP 5.50% 2/15/2012 - 1,605,833 - 1,605,833
(FSA)(1)
- 1,150,000 - 1,150,000 Duval County School Board COP 5.75% 7/1/2016 - 1,209,478 - 1,209,478
(FSA)
- 100,000 - 100,000 Escambia County Housing Finance 4.85% 4/1/2007 - 100,301 - 100,301
Auth. Single Family Mortgage
Rev., Series 1998 A,
(Multi-County Program) (GNMA/FNMA)
- 195,000 - 195,000 Florida Housing Finance Corp. 4.60% 1/1/2021 - 195,930 - 195,930
Rev., Series 1999-2, (Homeowner
Mortgage) (FSA)
- 1,000,000 - 1,000,000 Florida Municipal Loan Council 5.25% 11/1/2021 - 1,085,850 - 1,085,850
GO, Series 2002 C (MBIA)
- 350,000 - 350,000 Gainesville Utilities System 5.75% 10/1/2009 - 370,923 - 370,923
Rev., Series 1996 A
- 675,000 - 675,000 Greater Orlando Aviation Auth. 5.25% 10/1/2009 - 704,369 - 704,369
Rev., Series 1999 A (FGIC)
- - 1,000,000 1,000,000 Halifax Hospital Medical Center 5.25% 6/1/2016 - - 1,087,050 1,087,050
Rev., Series 2006 A
- - 3,495,000 3,495,000 Halifax Hospital Medical Center 5.25% 6/1/2017 - - 3,783,827 3,783,827
Rev., Series 2006 A
- 1,000,000 - 1,000,000 Halifax Hospital Medical Center 5.25% 6/1/2015 - 1,081,630 - 1,081,630
Rev., Series 2006 A
- 1,000,000 - 1,000,000 Halifax Hospital Medical Center 5.25% 6/1/2018 - 1,081,660 - 1,081,660
Rev., Series 2006 A
- - 500,000 500,000 Highlands County Health 5.00% 11/15/2009 - - 516,845 516,845
Facilities Auth. Rev., Series
2005 B, (Adventist Health)
- - 500,000 500,000 Highlands County Health 5.00% 11/15/2010 - - 522,130 522,130
Facilities Auth. Rev., Series
2005 B, (Adventist Health)
- 1,235,000 - 1,235,000 Indian River County Rev., 5.25% 4/1/2015 - 1,325,624 - 1,325,624
(Spring Training Facility)
(FGIC)(1)
- 850,000 - 850,000 Lee County Industrial Development 5.50% 11/15/2009 - 878,152 - 878,152
Health Care Facilities Auth.
Rev., Series 1999 A, (Shell Point
Village)
- 1,000,000 - 1,000,000 Miami Beach Stormwater Rev. 5.75% 9/1/2017 - 1,084,080 - 1,084,080
(FGIC)
- 1,910,000 - 1,910,000 Miami Beach Water & Sewer Rev. 5.625% 9/1/2016 - 2,060,527 - 2,060,527
(Ambac)(1)
- 650,000 - 650,000 Miami Parking Facilities Rev. 5.25% 10/1/2015 - 724,276 - 724,276
(MBIA)
- 1,000,000 - 1,000,000 Miami-Dade County School Board 5.50% 10/1/2011 - 1,086,600 - 1,086,600
COP, Series 2001 C, Prerefunded
at 100% of Par (FSA)(2)
- 1,000,000 - 1,000,000 Miami-Dade County School Board 5.50% 10/1/2011 - 1,086,600 - 1,086,600
COP, Series 2001 C, Prerefunded
at 100% of Par (FSA)(2)
- 1,875,000 - 1,875,000 Orange County School Board COP, 5.50% 8/1/2012 - 2,061,675 - 2,061,675
Series 2002 A, Prerefunded at
100% of Par (MBIA)(1)(2)
- 450,000 - 450,000 Orlando and Orange County 6.50% 7/1/2011 - 505,409 - 505,409
Expressway Auth. Rev. (FGIC)
- - 1,000,000 1,000,000 Orlando Utilities Commission 6.75% 10/1/2017 - - 1,207,860 1,207,860
Water & Electric Rev., Series
1989 D(2)
- 240,000 - 240,000 Palm Beach County Airport 5.75% 10/1/2014 - 275,388 - 275,388
Systems Rev. (MBIA)
- 760,000 - 760,000 Palm Beach County Airport 5.75% 10/1/2014 - 866,210 - 866,210
Systems Rev. (MBIA)
- 1,000,000 - 1,000,000 Palm Beach County School Board 5.375% 8/1/2012 - 1,091,050 - 1,091,050
COP, Series 2002 A, Prerefunded
at 100% of Par (FSA)(2)
- 2,000,000 - 2,000,000 Pasco County Solid Waste Disposal 6.00% 4/1/2010 - 2,118,198 - 2,118,198
& Resource Recovery System Rev.
(Ambac)(1)
- 155,000 - 155,000 Pensacola Airport Rev., Series 5.40% 10/1/2007 - 157,193 - 157,193
1997 B (MBIA)
- 300,000 - 300,000 Plantation Health Facilities 4.70% 12/1/2007 - 301,626 - 301,626
Auth. Rev., (Covenant Village
of Florida Inc.)
- 1,000,000 - 1,000,000 Sumter County School Board COP 5.50% 1/1/2021 - 1,092,960 - 1,092,960
(MBIA)
- 1,000,000 - 1,000,000 Sunrise Utility System Rev. 5.20% 10/1/2022 - 1,134,550 - 1,134,550
(Ambac)
- 400,000 - 400,000 Tampa Guaranteed Entitlement 6.00% 10/1/2018 - 459,688 - 459,688
Rev. (Ambac)
- 1,000,000 - 1,000,000 Tampa Water & Sewer Rev. (FSA) 6.00% 10/1/2017 - 1,201,750 - 1,201,750
-----------------------------------------------
- 31,235,681 7,117,712 38,353,393
===============================================
GEORGIA - 0.3%
- - 1,250,000 1,250,000 Fulton County Development Auth. 5.50% 9/1/2018 - - 1,371,325 1,371,325
Rev., Series 2001 A,
(TUFF/Atlanta Housing, LLC
Project at Georgia State
University) (Ambac)
- - 20,000 20,000 Georgia Municipal Electric Power 6.50% 1/1/2011 - - 21,640 21,640
Auth. Rev., Series 1991 V
(MBIA-IBC)
- - 615,000 615,000 Georgia Municipal Electric Power 6.50% 1/1/2012 - - 670,565 670,565
Auth. Rev., Series 1991 V
(MBIA-IBC)
- - 110,000 110,000 Georgia Municipal Electric Power 6.50% 1/1/2012 - - 122,383 122,383
Auth. Rev., Series 1991 V,
Prerefunded at 100% of Par
(MBIA-IBC)(2)
- - 255,000 255,000 Georgia Municipal Electric Power 6.50% 1/1/2009 - - 266,182 266,182
Auth. Rev., Series 1991 V, -----------------------------------------------
Prerefunded at 100% of Par - - 2,452,095 2,452,095
(MBIA-IBC)(2) ===============================================
HAWAII - 0.1%
- - 500,000 500,000 Maui County GO, Series 2000 A, 6.50% 3/1/2010 - - 549,605 549,605
Prerefunded at 101% of Par ================================================
(FGIC)(2)
IDAHO - 0.1%
- - 1,000,000 1,000,000 Blaine County Hailey School 5.00% 7/30/2010 - - 1,052,730 1,052,730
District No. 61 GO (Ambac) ================================================
ILLINOIS - 6.7%
- - 2,000,000 2,000,000 Bedford Park GO, Series 5.25% 12/15/2020 - - 2,200,740 2,200,740
2004 A (FSA)(1)
- - 4,000,000 4,000,000 Chicago O'Hare International 5.00% 1/1/2012 - - 4,251,320 4,251,320
Airport Rev., Series 1993 A,
(Senior Lien) (MBIA-IBC)(1)
- - 1,015,000 1,015,000 City of Chicago Rev., Series 5.00% 11/1/2013 - - 1,101,194 1,101,194
2006 A (Ambac)
- - 3,310,000 3,310,000 City of Chicago Rev., Series 5.00% 11/1/2014 - - 3,619,121 3,619,121
2006 A (Ambac)(1)
- - 2,000,000 2,000,000 Illinois Dedicated Tax Rev., 6.25% 12/15/2020 - - 2,431,320 2,431,320
(Civic Center) (Ambac)
- - 595,000 595,000 Illinois Development Finance 5.00% 5/15/2008 - - 603,842 603,842
Auth. Rev., Series 2001 B,
(Midwestern University)
- - 655,000 655,000 Illinois Development Finance 5.125% 5/15/2010 - - 678,462 678,462
Auth. Rev., Series 2001 B,
(Midwestern University)
- - 400,000 400,000 Illinois Development Finance 5.75% 5/15/2016 - - 427,528 427,528
Auth. Rev., Series 2001 B,
(Midwestern University)
- - 1,775,000 1,775,000 Illinois Finance Auth. Student 5.00% 5/1/2009 - - 1,811,991 1,811,991
Housing Rev., Series 2006 B,
(Educational Advancement Fund,
Inc.)
- - 1,000,000 1,000,000 Illinois Finance Auth. Student 5.00% 5/1/2010 - - 1,029,540 1,029,540
Housing Rev., Series 2006 B,
(Educational Advancement Fund,
Inc.)
- - 2,785,000 2,785,000 Illinois Finance Auth. Student 5.00% 5/1/2011 - - 2,893,838 2,893,838
Housing Rev., Series 2006 B,
(Educational Advancement Fund,
Inc.)
- - 3,535,000 3,535,000 Illinois Finance Auth. Student 5.00% 5/1/2013 - - 3,724,087 3,724,087
Housing Rev., Series 2006 B,
(Educational Advancement Fund,
Inc.)
- - 3,895,000 3,895,000 Illinois Finance Auth. Student 5.00% 5/1/2014 - - 4,115,885 4,115,885
Housing Rev., Series 2006 B,
(Educational Advancement Fund,
Inc.)
- - 4,095,000 4,095,000 Illinois Finance Auth. Student 5.00% 5/1/2015 - - 4,335,581 4,335,581
Housing Rev., Series 2006 B,
(Educational Advancement Fund,
Inc.)
- 1,000,000 1,000,000 2,000,000 Illinois Finance Auth. Student 5.25% 5/1/2019 - 1,070,600 1,070,600 2,141,200
Housing Rev., Series 2006 B,
(Education Advancement Fund,
Inc.)
- - 1,140,000 1,140,000 Illinois Health Facilities Auth. 6.75% 4/15/2012 - - 1,257,409 1,257,409
Rev., Series 1992 C, (Evangelical
Hospital)(2)
- - 1,000,000 1,000,000 Illinois Regional Transportation 7.20% 11/1/2020 - - 1,262,560 1,262,560
Auth. Rev., Series 1990 A
(Ambac)
- - 930,000 930,000 Kane County Community Unit 6.20% 1/1/2024 - - 1,091,522 1,091,522
School District No. 304 GO (FSA)
- - 70,000 70,000 Ogle Lee & De Kalb Counties 6.00% 12/1/2017 - - 77,747 77,747
Township High School District
No. 212 GO (MBIA)
- - 75,000 75,000 Ogle Lee & De Kalb Counties 6.00% 12/1/2018 - - 83,047 83,047
Township High School District
No. 212 GO (MBIA)
- - 1,035,000 1,035,000 Ogle Lee & De Kalb Counties 6.00% 12/1/2011 - - 1,151,044 1,151,044
Township High School District
No. 212 GO, Prerefunded at 100%
of Par (MBIA)(2)
- - 1,145,000 1,145,000 Ogle Lee & De Kalb Counties 6.00% 12/1/2011 - - 1,273,377 1,273,377
Township High School District No.
212 GO, Prerefunded at 100% of
Par (MBIA)(2)
- - 2,165,000 2,165,000 Southwestern Illinois Develop- 5.125% 8/15/2016 - - 2,313,021 2,313,021
ment Auth. Rev., (Anderson
Hospital)(3)
- - 1,000,000 1,000,000 Southwestern Illinois Develop- 5.00% 10/1/2018 - - 1,098,360 1,098,360
ment Auth. Rev., (Triad School
District No. 2) (MBIA/GO of
District)
- - 1,250,000 1,250,000 Town of Cicero GO, Series 2005 5.25% 1/1/2020 - - 1,370,113 1,370,113
A (XLCA)
- - 1,000,000 1,000,000 Town of Cicero GO, Series 2005 5.25% 1/1/2021 - - 1,094,640 1,094,640
A (XLCA)
- - 1,000,000 1,000,000 University of Illinois COP, 5.75% 8/15/2008 - - 1,035,340 1,035,340
(Utility Infrastructure) (MBIA)
- - 1,000,000 1,000,000 University of Illinois COP, 5.00% 3/15/2016 - - 1,095,690 1,095,690
Series 2006 A, (Academic ------------------------------------------------
Facilities) (Ambac) - 1,070,600 48,498,919 49,569,519
================================================
INDIANA - 2.3%
- - 1,405,000 1,405,000 Hammond Multi-School Building 5.00% 7/15/2014 - - 1,530,593 1,530,593
Corp. Rev., (First Mortgage)
(FGIC/State Aid Withholding)
- - 1,520,000 1,520,000 Indiana Bond Bank Rev., Series 5.00% 8/1/2017 - - 1,675,815 1,675,815
2006 A (FSA)
- - 1,600,000 1,600,000 Indiana Bond Bank Rev., Series 5.00% 8/1/2018 - - 1,759,376 1,759,376
2006 A (FSA)
- - 1,680,000 1,680,000 Indiana Bond Bank Rev., Series 5.00% 8/1/2019 - - 1,840,205 1,840,205
2006 A (FSA)
- - 1,075,000 1,075,000 Indiana Health & Educational 5.00% 2/15/2016 - - 1,155,604 1,155,604
Facilities Finance Auth. Rev.,
(Clarian Health Obligation
Group B)
- - 1,900,000 1,900,000 Indiana Health Facilities 5.375% 12/1/2012 - - 1,962,396 1,962,396
Financing Auth. Hospital Rev.,
(Holy Cross Health System Corp.)
(MBIA)
- - 780,000 780,000 Indiana Transportation Finance 7.25% 6/1/2015 - - 939,588 939,588
Auth. Rev., Series 1990 A
- - 220,000 220,000 Indiana Transportation Finance 7.25% 6/1/2015 - - 246,455 246,455
Auth. Rev., Series 1990 A,
Prerefunded at 100% of Par(2)
- - 1,435,000 1,435,000 Indianapolis Local Public 5.00% 7/1/2012 - - 1,539,181 1,539,181
Improvement Bond Bank Rev.,
Series 2002 A (MBIA)
- - 1,500,000 1,500,000 Mount Vernon of Hancock County 5.75% 7/15/2011 - - 1,639,875 1,639,875
Multi-School Building Corp. Rev.,
Series 2001 B, (First Mortgage)
Prerefunded at 100% of Par
(Ambac)(2)
- - 1,650,000 1,650,000 Valparaiso Middle Schools 5.75% 7/15/2011 - - 1,800,925 1,800,925
Building Corp. Rev., (First
Mortgage), Prerefunded at 100%
of Par (FGIC)(2)
- - 1,000,000 1,000,000 Zionsville Community Schools 5.75% 1/15/2012 - - 1,101,480 1,101,480
Building Corp. GO, (First ------------------------------------------------
Mortgage) (FGIC/State Aid - - 17,191,493 17,191,493
Withholding) ================================================
IOWA - 0.7%
- 2,000,000 - 2,000,000 Iowa Finance Auth. Health 5.25% 7/1/2014 - 2,097,380 - 2,097,380
Facilities Development Rev.,
Series 2006 A, (Care
Initiatives)(1)
- - 1,485,000 1,485,000 Iowa Finance Auth. Rev., Series 5.25% 7/1/2013 - - 1,554,706 1,554,706
2006 A, (Development Care
Initiatives)
- - 1,690,000 1,690,000 Iowa Finance Auth. Rev., Series 5.25% 7/1/2016 - - 1,778,995 1,778,995
2006 A, (Development Care ------------------------------------------------
Initiatives) - 2,097,380 3,333,701 5,431,081
================================================
KANSAS - 0.4%
- - 1,280,000 1,280,000 Wichita Hospital Facilities 5.25% 11/15/2013 - - 1,359,321 1,359,321
Rev., Series 2001 III
- - 1,195,000 1,195,000 Wichita Hospital Facilities 5.50% 11/15/2016 - - 1,274,420 1,274,420
Rev., Series 2001 III ------------------------------------------------
- - 2,633,741 2,633,741
================================================
LOUISIANA - 0.6%
- - 1,740,000 1,740,000 Louisiana Local Government 5.25% 4/1/2023 - - 1,896,008 1,896,008
Environmental Facilities &
Community Development Auth.
Rev., (Ascension Parish Library)
(Ambac)
- - 1,105,000 1,105,000 Louisiana Public Facilities Auth. 4.00% 7/1/2013 - - 1,129,708 1,129,708
Rev., Series 2006 A, (Black &
Gold Facilities) (CIFG)
- - 1,205,000 1,205,000 Louisiana Public Facilities Auth. 5.00% 7/1/2015 - - 1,317,909 1,317,909
Rev., Series 2006 A, (Black & ------------------------------------------------
Gold Facilities) (CIFG) - - 4,343,625 4,343,625
================================================
MASSACHUSETTS - 0.6%
- - 2,500,000 2,500,000 Commonwealth of Massachusetts 5.00% 8/1/2014 - - 2,733,150 2,733,150
GO, Series 2006 D
- - 1,000,000 1,000,000 Massachusetts Development 5.00% 1/1/2023 - - 1,075,840 1,075,840
Finance Agency Rev., Series
2006 A, (Emerson College)
- - 885,000 885,000 Massachusetts Health & 6.25% 7/1/2012 - - 950,136 950,136
Educational Facilities Auth. ------------------------------------------------
Rev., Series 1992 F (Ambac) - - 4,759,126 4,759,126
================================================
MICHIGAN - 4.4%
- - 3,500,000 3,500,000 Detroit GO, Series 2004 A-1 5.25% 4/1/2023 - - 3,783,675 3,783,675
(Ambac)
- - 1,485,000 1,485,000 Grand Valley State University 5.75% 12/1/2010 - - 1,607,928 1,607,928
Rev., Prerefunded at 100% of
Par (FGIC)(2)
- - 1,265,000 1,265,000 Kalamazoo Public Schools GO 4.00% 5/1/2013 - - 1,296,296 1,296,296
(FSA)
- - 1,250,000 1,250,000 Kalamazoo Public Schools GO 5.00% 5/1/2015 - - 1,373,050 1,373,050
(FSA)
- - 1,545,000 1,545,000 Kalamazoo Public Schools GO 5.25% 5/1/2016 - - 1,736,302 1,736,302
(FSA)
- - 5,000,000 5,000,000 Michigan Building Auth. Rev., 5.25% 10/15/2011 - - 5,383,000 5,383,000
Series 2003 I, (Facilities
Program) (FSA)(1)
- - 2,345,000 2,345,000 Michigan Higher Education 5.00% 3/1/2026 - - 2,458,850 2,458,850
Facilities Auth. Rev., (Limited
Obligation - Hillsdale College)
- - 1,070,000 1,070,000 Pontiac City School District GO 5.00% 5/1/2013 - - 1,157,376 1,157,376
(XLCA)
- - 1,110,000 1,110,000 Pontiac City School District GO 5.00% 5/1/2014 - - 1,210,966 1,210,966
(XLCA)
- - 1,260,000 1,260,000 Pontiac City School District GO 5.00% 5/1/2015 - - 1,384,034 1,384,034
(XLCA)
- - 1,425,000 1,425,000 Pontiac City School District GO 5.00% 5/1/2016 - - 1,573,314 1,573,314
(XLCA)
- - 1,595,000 1,595,000 Pontiac City School District GO 5.00% 5/1/2017 - - 1,755,664 1,755,664
(XLCA)
- - 575,000 575,000 Taylor GO (MBIA) 5.00% 9/1/2011 - - 611,783 611,783
- - 2,010,000 2,010,000 Wayne Charter County Airport 5.00% 12/1/2011 - - 2,136,369 2,136,369
Rev., Series 2002 C (FGIC)
- - 2,215,000 2,215,000 Wayne Charter County Airport 5.375% 12/1/2013 - - 2,422,678 2,422,678
Rev., Series 2002 C (FGIC)
- - 2,335,000 2,335,000 Wayne Charter County Airport 5.375% 12/1/2014 - - 2,548,676 2,548,676
Rev., Series 2002 C (FGIC) ------------------------------------------------
- - 32,439,961 32,439,961
================================================
MINNESOTA - 0.6%
- - 1,500,000 1,500,000 Minnesota Higher Education 5.00% 10/1/2012 - - 1,609,995 1,609,995
Facilities Auth. Rev., Series
2005-6G, (Saint John University)
- - 3,000,000 3,000,000 St. Paul Housing & Redevelopment 5.25% 5/15/2036 - - 3,195,060 3,195,060
Auth. Health Care Facilities ------------------------------------------------
Rev., (Healthpartners Obligated - - 4,805,055 4,805,055
Group) ================================================
MISSISSIPPI - 2.3%
- - 1,565,000 1,565,000 Mississippi Development Bank 5.00% 11/1/2015 - - 1,718,088 1,718,088
Special Obligation Rev., Series
2006 A, (Biloxi, Mississippi)
(Ambac)
- - 1,645,000 1,645,000 Mississippi Development Bank 5.00% 11/1/2016 - - 1,813,777 1,813,777
Special Obligation Rev., Series
2006 A, (Biloxi, Mississippi)
(Ambac)
- - 1,000,000 1,000,000 Mississippi Development Bank 5.00% 3/1/2017 - - 1,092,170 1,092,170
Special Obligation Rev., Series
2006 A, (Municipal Energy
Agency Power Supply) (XLCA)
- - 7,925,000 7,925,000 State of Mississippi GO, 5.25% 11/1/2012 - - 8,622,955 8,622,955
(Capital Improvement),
Prerefunded at 100%
of Par (FGIC)(1)(2)
- - 1,195,000 1,195,000 University of Southern 5.00% 3/1/2017 - - 1,310,999 1,310,999
Mississippi Rev., Series 2006 A
(FSA)
- - 1,940,000 1,940,000 University of Southern 5.00% 3/1/2018 - - 2,122,127 2,122,127
Mississippi Rev., Series 2006 A ------------------------------------------------
(FSA) - - 16,680,116 16,680,116
================================================
MISSOURI - 2.2%
- - 1,145,000 1,145,000 Jackson County Public Building 6.00% 11/1/2008 - - 1,208,479 1,208,479
Corp. COP, Series 2000 A,
Prerefunded at 101% of Par(2)
- - 1,425,000 1,425,000 Jackson County Public Building 5.00% 12/1/2015 - - 1,566,545 1,566,545
Corp. Rev., Series 2006 A,
(Capital Improvements) (MBIA)
- - 2,775,000 2,775,000 Missouri Development Finance 5.75% 4/1/2022 - - 2,956,318 2,956,318
Board COP, Series 2000 A,
(Midtown Redevelopment) (MBIA)
- - 2,650,000 2,650,000 Missouri Health & Educational 5.60% 1/1/2015 - - 2,823,469 2,823,469
Facilities Auth. Rev., Series
1998 A, (Park Lane Medical
Center) (MBIA)
- - 3,145,000 3,145,000 Missouri Joint Municipal Electric 5.00% 1/1/2016 - - 3,469,438 3,469,438
Utility Commission Rev., (Plum
Point) (MBIA)
- - 3,030,000 3,030,000 Missouri State Highways & Transit 5.00% 5/1/2013 - - 3,284,672 3,284,672
Commission Rev., Series 2006 A
- - 1,000,000 1,000,000 St. Louis Municipal Finance Corp. 4.00% 2/15/2017 - - 1,016,380 1,016,380
Rev., Series 2006 A, (Carnahan ------------------------------------------------
Courthouse) (Ambac) - - 16,325,301 16,325,301
================================================
NORTH CAROLINA - 2.0%
- - 1,000,000 1,000,000 Charlotte Airport Rev., Series 5.25% 7/1/2024 - - 1,084,810 1,084,810
2004 A (MBIA)
- - 2,000,000 2,000,000 City of Raleigh Combined 5.00% 3/1/2017 - - 2,205,660 2,205,660
Enterprise System Rev., Series
2006 A
- - 1,000,000 1,000,000 North Carolina Medical Care 5.00% 11/1/2034 - - 1,063,240 1,063,240
Commission Rev., (Novant Health
Obligated Group)(3)
- - 4,150,000 4,150,000 North Carolina Medical Care 5.50% 10/1/2024 - - 4,491,960 4,491,960
Commission Rev., Series 2004 A,
(Health Care Housing - ARC
Projects)
- - 1,000,000 1,000,000 North Carolina Municipal Power 6.00% 1/1/2010 - - 1,071,440 1,071,440
Agency No. 1 Catawba Electric
Rev. (MBIA)
- - 2,000,000 2,000,000 North Carolina Municipal Power 5.50% 1/1/2013 - - 2,176,900 2,176,900
Agency No. 1 Catawba Electric
Rev., Series 2003 A
- - 1,560,000 1,560,000 University of North Carolina 5.00% 10/1/2016 - - 1,729,931 1,729,931
Rev., Series 2006 A (MBIA)
- - 1,000,000 1,000,000 University of North Carolina 5.00% 10/1/2033 - - 1,081,880 1,081,880
Rev., Series 2006 A (MBIA)
------------------------------------------------
- - 14,905,821 14,905,821
================================================
NORTH DAKOTA - 0.2%
- - 1,500,000 1,500,000 Grand Forks Health Care System 7.125% 8/15/2024 - - 1,668,225 1,668,225
Rev., (Altru Health System ================================================
Obligation Group)
NEVADA - 1.0%
- - 3,295,000 3,295,000 Las Vegas Redevelopment Agency 4.50% 6/15/2010 - - 3,336,912 3,336,912
Tax Increment Rev., Series 2003
A, (Fremont Street)
- - 1,550,000 1,550,000 Reno Sales and Room Tax Rev., 5.50% 6/1/2012 - - 1,697,048 1,697,048
(ReTrac-Reno Transportation Rail
Access Corridor), (Senior Lien),
Prerefunded at 100% of Par
(Ambac)(2)
- - 1,865,000 1,865,000 Reno Sales and Room Tax Rev., 5.50% 6/1/2012 - - 2,041,933 2,041,933
(ReTrac-Reno Transportation Rail ------------------------------------------------
Access Corridor), (Senior Lien), - - 7,075,893 7,075,893
Prerefunded at 100% of Par ================================================
(Ambac)(2)
NEW HAMPSHIRE - 0.9%
- - 1,660,000 1,660,000 New Hampshire Health & Education 5.00% 10/1/2011 - - 1,726,699 1,726,699
Facilities Auth. Rev., Series
2004 A, (Kendal at Hanover)
- - 680,000 680,000 New Hampshire Health & Education 5.00% 10/1/2012 - - 711,334 711,334
Facilities Auth. Rev., Series
2004 A, (Kendal at Hanover)
- - 1,030,000 1,030,000 New Hampshire Health & Education 5.00% 10/1/2013 - - 1,080,151 1,080,151
Facilities Auth. Rev., Series
2004 A, (Kendal at Hanover)
- - 3,000,000 3,000,000 New Hampshire Health & Education 5.00% 10/1/2018 - - 3,115,410 3,115,410
Facilities Auth. Rev., Series ------------------------------------------------
2004 A, (Kendal at Hanover) - - 6,633,594 6,633,594
================================================
NEW JERSEY - 4.9%
- - 5,595,000 5,595,000 New Jersey Transit Corporation 5.00% 10/1/2013 - - 6,041,033 6,041,033
COP (FSA)(1)
- - 4,235,000 4,235,000 New Jersey Transit Corporation 5.00% 10/1/2012 - - 4,531,747 4,531,747
COP (FSA)
- - 7,400,000 7,400,000 New Jersey Transportation Trust 5.25% 12/15/2012 - - 8,068,072 8,068,072
Fund Auth. Rev., Series 2004 B
(FGIC)(1)
- - 15,000,000 15,000,000 New Jersey Transportation Trust 5.25% 12/15/2020 - - 17,147,100 17,147,100
Fund Auth. Rev., Series 2006 ------------------------------------------------
A(1) - - 35,787,952 35,787,952
================================================
NEW MEXICO - 1.5%
- - 2,340,000 2,340,000 City of Clayton Rev., (Jail 5.00% 11/1/2010 - - 2,448,670 2,448,670
Project) (CIFG)(1)
- - 6,675,000 6,675,000 Los Alamos County Inc. Rev., 5.00% 7/1/2011 - - 7,082,575 7,082,575
Series 2004 A (FSA)(1)
- - 1,415,000 1,415,000 San Juan County Gross Receipts 5.75% 9/15/2021 - - 1,556,684 1,556,684
Tax Rev., Series 2001 A (Ambac)
------------------------------------------------
- - 11,087,929 11,087,929
================================================
NEW YORK - 4.4%
- - 2,975,000 2,975,000 City of New York GO, Series 2002 5.25% 8/1/2009 - - 3,105,275 3,105,275
B (CIFG)
- - 2,885,000 2,885,000 City of New York GO, Series 2002 5.25% 8/1/2009 - - 3,011,334 3,011,334
C (CIFG)
- - 5,000,000 5,000,000 City of New York GO, Series 2003 5.75% 3/1/2013 - - 5,619,100 5,619,100
I, Prerefunded at 100% of
Par(1)(2)
- - 5,195,000 5,195,000 City of New York GO, Series 2004 5.00% 11/1/2017 - - 5,654,810 5,654,810
D (FSA)(1)
- - 4,000,000 4,000,000 City of New York GO, Series 2006 5.00% 6/1/2018 - - 4,354,880 4,354,880
J-1(1)
- - 710,000 710,000 Monroe County Industrial 4.00% 8/1/2010 - - 711,051 711,051
Development Agency Rev.,
(Highland Hospital Rochester)
- - 855,000 855,000 Monroe County Industrial 4.00% 8/1/2009 - - 855,932 855,932
Development Agency Rev.,
(Highland Hospital Rochester)
- - 890,000 890,000 Monroe County Industrial 4.00% 8/1/2010 - - 891,317 891,317
Development Agency Rev.,
(Highland Hospital Rochester)
- - 920,000 920,000 Monroe County Industrial 5.00% 8/1/2011 - - 958,980 958,980
Development Agency Rev.,
(Highland Hospital Rochester)
- - 2,000,000 2,000,000 New York City Transitional 5.00% 11/1/2010 - - 2,111,040 2,111,040
Finance Auth. Rev., Series 2005 A1
- - 1,440,000 1,440,000 New York Dormitory Auth. Rev., 7.50% 5/15/2013 - - 1,757,319 1,757,319
Series 1990 A, (UNIC Educational
Facilities) (MBIA-IBC)
- - 1,000,000 1,000,000 New York Dormitory Auth. Rev., 5.00% 3/15/2012 - - 1,071,580 1,071,580
Series 2005 F (FSA)
- - 1,125,000 1,125,000 New York Dormitory Auth. Rev., 5.00% 7/1/2015 - - 1,229,546 1,229,546
Series 2006 A, (Department of
Education)
- - 1,000,000 1,000,000 Niagara Falls Bridge Commission 5.25% 10/1/2015 - - 1,084,470 1,084,470
Toll Rev., Series 1993 B (FGIC)
------------------------------------------------
- - 32,416,634 32,416,634
================================================
OHIO - 1.6%
- - 1,000,000 1,000,000 Cincinnati City School District 4.25% 12/15/2019 - - 1,020,080 1,020,080
COP (FSA)
- - 500,000 500,000 Erie County Hospital Facilities 4.50% 8/15/2007 - - 502,170 502,170
Rev., Series 2002 A, (Firelands
Regional Medical Center)
- - 1,150,000 1,150,000 Mad River Local School District 5.75% 12/1/2012 - - 1,286,034 1,286,034
GO, (Classroom Facilities),
Prerefunded at 100% of Par
(FGIC)(2)
- - 1,700,000 1,700,000 Milford Exempt Village School 6.00% 12/1/2011 - - 1,890,604 1,890,604
District GO, (School Improvement)
(FSA)
- - 1,005,000 1,005,000 Ohio GO, Series 2005 A, 5.00% 9/1/2011 - - 1,070,204 1,070,204
(Infrastructure Improvement)
- - 1,365,000 1,365,000 Ohio GO, Series 2005 A, 5.00% 9/1/2012 - - 1,468,931 1,468,931
(Infrastructure Improvement)
- - 750,000 750,000 Ohio Higher Educational Facility 6.50% 10/1/2020 - - 933,435 933,435
Commission Rev., Series 1990 B,
(Case Western Reserve University)
- - 1,505,000 1,505,000 Summit County GO, Prerefunded at 5.75% 12/1/2012 - - 1,691,740 1,691,740
101% of Par (FGIC)(2)
- - 1,550,000 1,550,000 Tri Valley Local School District 5.75% 12/1/2021 - - 1,711,355 1,711,355
GO (FGIC) ------------------------------------------------
- - 11,574,553 11,574,553
================================================
OKLAHOMA - 3.0%
- - 1,000,000 1,000,000 Comanche County Hospital Auth. 5.00% 7/1/2011 - - 1,051,970 1,051,970
Rev. (RADIAN)
- - 1,525,000 1,525,000 Comanche County Hospital Auth. 5.00% 7/1/2012 - - 1,618,254 1,618,254
Rev. (RADIAN)
- - 1,730,000 1,730,000 Durant Community Facilities 5.75% 11/1/2024 - - 1,964,484 1,964,484
Auth. GO (XLCA)
- - 1,135,000 1,135,000 McClain County Economic 5.00% 9/1/2010 - - 1,174,521 1,174,521
Development Auth. Rev,
(Newcastle Public Schools)
- - 750,000 750,000 McClain County Economic 5.00% 9/1/2011 - - 782,453 782,453
Development Auth. Rev,
(Newcastle Public Schools)
- - 500,000 500,000 McClain County Economic 5.00% 9/1/2012 - - 525,515 525,515
Development Auth. Rev,
(Newcastle Public Schools)
- - 1,640,000 1,640,000 McClain County Economic 5.00% 9/1/2013 - - 1,731,446 1,731,446
Development Auth. Rev,
(Newcastle Public Schools)
- - 1,300,000 1,300,000 Oklahoma County Finance Auth. 4.00% 9/1/2010 - - 1,320,098 1,320,098
Rev., (Western Heights Public
Schools) (Assured Guaranty)
- - 1,730,000 1,730,000 Pottawatomie County Facilities 5.00% 9/1/2014 - - 1,818,195 1,818,195
Auth. Rev., (Shawnee Public
Schools)
- - 1,710,000 1,710,000 Pottawatomie County Facilities 5.00% 9/1/2015 - - 1,793,585 1,793,585
Auth. Rev., (Shawnee Public
Schools)
- 1,000,000 1,130,000 2,130,000 Pottawatomie County Facilities 5.00% 9/1/2016 - 1,047,470 1,183,641 2,231,111
Auth. Rev., (Shawnee Public
Schools)
- - 1,000,000 1,000,000 Tulsa County Industrial Auth. 4.00% 9/1/2009 - - 1,010,560 1,010,560
Rev., (Owasso Public Schools)
(Assured Guaranty)
- - 5,225,000 5,225,000 Tulsa County Industrial Auth. 5.00% 5/15/2010 - - 5,474,285 5,474,285
Rev., Series 2005 C (FSA)(1) ------------------------------------------------
- 1,047,470 21,449,007 22,496,477
================================================
OREGON - 1.5%
- - 1,000,000 1,000,000 City of Eugene GO, (Public 4.00% 6/1/2014 - - 1,029,210 1,029,210
Safety Park & Open Space) (Ambac)
- - 2,015,000 2,015,000 Clackamas County School Distrist 5.50% 6/15/2010 - - 2,147,143 2,147,143
No. 62 GO (School Bond
Guarantee)(1)
- - 2,000,000 2,000,000 Cow Creek Band of Umpqua Tribe 5.625% 10/1/2026 - - 2,055,040 2,055,040
of Indians Rev., Series 2006 C
- - 400,000 400,000 Oregon State Facilities Auth. 5.00% 10/1/2013 - - 424,436 424,436
Rev., Series 2005 A, (Linfield
College)
- - 925,000 925,000 Oregon State Facilities Auth. 5.00% 10/1/2014 - - 983,451 983,451
Rev., Series 2005 A, (Linfield
College)
- - 4,750,000 4,750,000 Tri-County Metropolitan 4.00% 5/1/2014 - - 4,788,950 4,788,950
Transportation District Rev., ------------------------------------------------
(Payroll Tax & Grant Receipt) - - 11,428,230 11,428,230
(MBIA)(1) ================================================
PENNSYLVANIA - 4.6%
- - 2,250,000 2,250,000 Allegheny County Industrial 4.75% 9/1/2014 - - 2,304,540 2,304,540
Development Auth. Rev.,
(Residential Resource Inc.)
- - 1,150,000 1,150,000 Central Dauphin School District 7.00% 2/1/2027 - - 1,443,250 1,443,250
GO (MBIA)
- - 15,805,000 15,805,000 City of Pittsburgh GO, Series 5.25% 9/1/2016 - - 17,769,561 17,769,561
2006 B (FSA)(1)
- - 2,580,000 2,580,000 East Stroudsburg Area School 7.75% 9/1/2028 - - 3,402,607 3,402,607
District GO (FSA/State Aid
Withholding)(3)
- - 1,000,000 1,000,000 Oxford Area School District GO, 5.50% 2/15/2012 - - 1,093,170 1,093,170
Series 2001 A, Prerefunded at
100% of Par (FGIC/State Aid
Withholding)(2)
- - 2,975,000 2,975,000 Philadelphia School District GO, 5.25% 2/1/2011 - - 3,167,483 3,167,483
Series 2002 A (FSA/State Aid
Withholding)
- - 4,380,000 4,380,000 Philadelphia School District GO, 5.50% 2/1/2012 - - 4,785,325 4,785,325
Series 2002 A, Prerefunded at ------------------------------------------------
100% of Par (FSA/State Aid - - 33,965,936 33,965,936
Withholding)(1)(2) ================================================
PUERTO RICO - 2.7%
1,000,000 - - 1,000,000 Government Development Bank of 4.00% 1/24/2007 999,750 - - 999,750
Puerto Rico Rev.
1,000,000 1,000,000 - 2,000,000 Government Development Bank of 5.00% 12/1/2016 1,090,130 1,090,130 - 2,180,260
Puerto Rico Rev., Series 2006 B
- - 3,000,000 3,000,000 Puerto Rico GO, Series 2006 A 5.25% 7/1/2026 - - 3,279,810 3,279,810
1,000,000 1,000,000 3,000,000 5,000,000 Puerto Rico GO, Series 2006 B 5.25% 7/1/2017 1,104,130 1,104,130 3,312,390 5,520,650
1,500,000 - - 1,500,000 Puerto Rico GO, Series 2006 B 5.25% 7/1/2022 1,646,145 - - 1,646,145
- - 2,000,000 2,000,000 Puerto Rico Infrastructure 5.00% 7/1/2013 - - 2,138,020 2,138,020
Financing Auth. Special Tax
Rev., Series 2006 B
- - 3,700,000 3,700,000 Puerto Rico Municipal Finance 5.00% 8/1/2011 - - 3,891,882 3,891,882
Agency GO, Series 2005 A ------------------------------------------------
4,840,155 2,194,260 12,622,102 19,656,517
================================================
RHODE ISLAND - 0.5%
- - 1,000,000 1,000,000 Cranston GO, Prerefunded at 6.375% 11/15/2009 - - 1,088,840 1,088,840
101% of Par (FGIC)(2)
- - 2,000,000 2,000,000 Rhode Island Depositors Economic 6.25% 8/1/2016 - - 2,414,000 2,414,000
Protection Corp. Special
Obligation Rev., Series 1993 A ------------------------------------------------
(MBIA)(2) - - 3,502,840 3,502,840
================================================
SOUTH CAROLINA - 4.2%
- - 5,455,000 5,455,000 Charleston Educational Excellence 5.00% 12/1/2019 - - 5,903,892 5,903,892
Finance Corp. Rev., (Charleston
County School District)(1)
- - 1,700,000 1,700,000 Florence Water & Sewer Rev. 7.50% 3/1/2018 - - 1,919,878 1,919,878
(Ambac)
- - 1,060,000 1,060,000 Kershaw County Rev., (School 5.00% 12/1/2017 - - 1,159,216 1,159,216
Improvements) (CIFG)
- - 2,260,000 2,260,000 Kershaw County Rev., (School 5.00% 12/1/2018 - - 2,465,457 2,465,457
Improvements) (CIFG)
- - 2,000,000 2,000,000 Kershaw County Rev., (School 5.00% 12/1/2019 - - 2,173,180 2,173,180
Improvements) (CIFG)
- - 3,000,000 3,000,000 Kershaw County Rev., (School 5.00% 12/1/2020 - - 3,254,340 3,254,340
Improvements) (CIFG)
- - 2,300,000 2,300,000 Lancaster Educational Assistance 5.00% 12/1/2026 - - 2,398,555 2,398,555
Program Inc. Rev., (School
District Lancaster County)
- - 3,500,000 3,500,000 Laurens County School District 5.25% 12/1/2030 - - 3,731,245 3,731,245
No. 55 Rev.
- - 875,000 875,000 Piedmont Municipal Power Agency 6.75% 1/1/2019 - - 1,107,164 1,107,164
Rev. (FGIC)
- - 625,000 625,000 Piedmont Municipal Power Agency 6.75% 1/1/2019 - - 802,675 802,675
Rev. (FGIC)(2)
- - 375,000 375,000 Piedmont Municipal Power Agency 6.50% 1/1/2016 - - 454,256 454,256
Rev., Series 1991 A (FGIC)
- - 140,000 140,000 Piedmont Municipal Power Agency 6.50% 1/1/2016 - - 170,674 170,674
Rev., Series 1991 A (FGIC)(2)
- - 485,000 485,000 Piedmont Municipal Power Agency 6.50% 1/1/2016 - - 591,263 591,263
Rev., Series 1991 A (FGIC)(2)
- - 3,195,000 3,195,000 South Carolina Jobs Economic 5.50% 8/1/2009 - - 3,328,583 3,328,583
Development Auth. Hospital
Facilities Rev., Series 2003 C,
(Palmetto Health) (ACA)
- - 1,095,000 1,095,000 Spartanburg County Health 5.50% 4/15/2016 - - 1,189,061 1,189,061
Services District Inc. Hospital ------------------------------------------------
Rev. (FSA) - - 30,649,439 30,649,439
================================================
TENNESSEE - 0.6%
- - 4,105,000 4,105,000 Chattanooga Health Educational 5.00% 10/1/2015 - - 4,260,621 4,260,621
& Housing Facility Board Rev., ================================================
Series 2005 A, (Campus
Development Foundation, Inc.
Phase I LLC)
TEXAS - 7.1%
- - 1,000,000 1,000,000 Canadian River Municipal Water 5.00% 2/15/2019 - - 1,087,100 1,087,100
Auth. Rev., (Conjunctive Use
Groundwater) (Ambac)
- - 2,035,000 2,035,000 Cash Special Utility District 5.25% 9/1/2024 - - 2,224,275 2,224,275
Rev. (MBIA)(1)
- 1,000,000 - 1,000,000 City of Richardson GO (MBIA) 5.25% 2/15/2018 - 1,113,690 - 1,113,690
- - 1,815,000 1,815,000 Clint Independent School 6.00% 2/15/2017 - - 1,984,702 1,984,702
District GO (PSF-GTD)
- - 500,000 500,000 Corpus Christi Independent 4.00% 8/15/2013 - - 501,780 501,780
Schoool District GO (PSF-GTD)
- - 270,000 270,000 Denison Hospital Auth. Rev., 5.90% 2/15/2007 - - 276,637 276,637
(Texoma Medical Center),
Prerefunded at 102% of Par
(ACA)(2)
- - 2,000,000 2,000,000 Donna Independent School 5.00% 2/15/2015 - - 2,185,900 2,185,900
District GO (PSF-GTD)
- - 1,115,000 1,115,000 Edcouch-Elsa Independent School 5.00% 2/15/2014 - - 1,210,544 1,210,544
District GO (PSF-GTD)
- - 380,000 380,000 Garza County Public Facility 4.50% 10/1/2007 - - 380,505 380,505
Corp. Rev.
- - 400,000 400,000 Garza County Public Facility 4.75% 10/1/2008 - - 402,632 402,632
Corp. Rev.
- - 420,000 420,000 Garza County Public Facility 4.75% 10/1/2009 - - 424,523 424,523
Corp. Rev.
- - 585,000 585,000 Garza County Public Facility 4.75% 10/1/2010 - - 593,564 593,564
Corp. Rev.
- - 610,000 610,000 Garza County Public Facility 5.00% 10/1/2011 - - 627,891 627,891
Corp. Rev.
- - 2,015,000 2,015,000 Garza County Public Facility 5.00% 10/1/2013 - - 2,088,003 2,088,003
Corp. Rev.
- - 1,115,000 1,115,000 Garza County Public Facility 5.25% 10/1/2014 - - 1,174,151 1,174,151
Corp. Rev.
- - 1,225,000 1,225,000 Garza County Public Facility 5.25% 10/1/2015 - - 1,293,588 1,293,588
Corp. Rev.
- - 1,145,000 1,145,000 Garza County Public Facility 5.25% 10/1/2016 - - 1,212,108 1,212,108
Corp. Rev.
- - 1,000,000 1,000,000 Garza County Public Facility 5.50% 10/1/2016 - - 1,071,720 1,071,720
Corp. Rev.
- - 1,000,000 1,000,000 Gregg County Health Facilities 5.00% 10/1/2016 - - 1,063,860 1,063,860
Development Corp. Rev., Series
2006 A, (Good Shepherd Medical
Center)
- - 815,000 815,000 Harris County Housing Finance 4.90% 3/1/2011 - - 829,140 829,140
Corporation Rev., (Las Americas
Apartments) (FNMA)
- - 2,300,000 2,300,000 Hays Consolidated Independent 5.20% 8/15/2011 - - 1,929,999 1,929,999
School District GO (PSF-GTD)(4)
- - 700,000 700,000 Hays Consolidated Independent 5.20% 8/15/2011 - - 589,022 589,022
School District GO (PSF-GTD)
(2)(4)
- - 1,295,000 1,295,000 Hidalgo County GO (FGIC) 5.50% 8/15/2019 - - 1,424,720 1,424,720
- - 1,750,000 1,750,000 Hidalgo County GO (FGIC) 5.50% 8/15/2021 - - 1,925,297 1,925,297
- - 1,500,000 1,500,000 Houston Water & Sewer System 5.375% 12/1/2007 - - 1,541,745 1,541,745
Rev., Series 1997 C, (Junior
Lien), Prerefunded at 101% of
Par (FGIC)(2)
- - 1,375,000 1,375,000 Kerrville Health Facilities 5.00% 8/15/2011 - - 1,424,734 1,424,734
Development Corp. Rev., (Sid
Peterson Memorial Hospital)
- - 1,630,000 1,630,000 Live Oak GO (MBIA) 5.25% 8/1/2022 - - 1,780,205 1,780,205
- - 1,000,000 1,000,000 Lubbock Health Facilities 6.00% 3/20/2029 - - 1,096,510 1,096,510
Development Corp. Rev.,
(Lutheran Retirement) (GNMA)
- - 1,740,000 1,740,000 Montgomery County GO (Ambac) 5.50% 3/1/2024 - - 1,922,387 1,922,387
- - 550,000 550,000 Pasadena Independent School 6.05% 2/15/2016 - - 645,310 645,310
District GO, Series 2001 A
(PSF-GTD)
- - 1,500,000 1,500,000 Pearland Independent School 6.00% 2/15/2009 - - 1,578,765 1,578,765
District GO, Prerefunded at 100%
of Par (PSF-GTD)(2)
- - 2,000,000 2,000,000 San Antonio Electric and Gas 7.10% 2/1/2009 - - 1,850,240 1,850,240
Rev. (FGIC)(2)(4)
- - 1,505,000 1,505,000 Seguin Independent School 5.25% 4/1/2023 - - 1,646,651 1,646,651
District GO (PSF-GTD)
- - 2,120,000 2,120,000 Southside Independent School 5.25% 8/15/2025 - - 2,319,174 2,319,174
District GO, Series 2004 A
(PSF-GTD)
- - 2,345,000 2,345,000 Texas Municipal Power Agency COP, 4.00% 9/1/2009 - - 2,352,809 2,352,809
(Sub-Lien) (FGIC)
- - 950,000 950,000 Texas Public Finance Auth. 6.25% 8/1/2009 - - 990,119 990,119
Building Rev., (Technical
College) (MBIA)
- 1,000,000 - 1,000,000 Texas Public Finance Auth. 5.25% 2/15/2014 - 1,073,210 - 1,073,210
Charter School Finance Corp.
Rev., Series 2006 A, (KIPP, Inc.)
(ACA)
- - 1,000,000 1,000,000 Travis County Health Facilities 5.875% 11/15/2009 - - 1,074,180 1,074,180
Development Corp. Rev., Series
1999 A, (Ascension Health
Credit), Prerefunded at 101% of
Par (Ambac)(2)
- - 1,265,000 1,265,000 West Oso Independent School 5.50% 8/15/2026 - - 1,387,288 1,387,288
District GO (PSF-GTD)
- - 1,705,000 1,705,000 Williamson County GO, 4.25% 2/15/2020 - - 1,723,005 1,723,005
(Pass-Through Toll & Limited ------------------------------------------------
Tax) (FSA) - 2,186,900 49,834,783 52,021,683
================================================
U.S. VIRGIN ISLANDS - 0.3%
- - 2,000,000 2,000,000 Virgin Islands Public Finance 5.20% 10/1/2009 - - 2,064,700 2,064,700
Auth. Rev., Series 1998 A, ================================================
(Senior Lien)
UTAH - 1.4%
- - 1,000,000 1,000,000 Salt Lake City Hospital Rev., 8.125% 5/15/2015 - - 1,186,930 1,186,930
Series 1988 A, (Intermountain
Health Corporation) (2)
- - 1,495,000 1,495,000 Utah County Municipal Building 5.00% 11/1/2009 - - 1,557,311 1,557,311
Auth. Lease Rev. (Ambac)(2)
- - 1,820,000 1,820,000 Utah County Municipal Building 5.25% 11/1/2011 - - 1,957,210 1,957,210
Auth. Lease Rev., Prerefunded
at 100% of Par (Ambac)(2)
- - 1,915,000 1,915,000 Utah County Municipal Building 5.25% 11/1/2011 - - 2,059,372 2,059,372
Auth. Lease Rev., Prerefunded
at 100% of Par (Ambac)(2)
- - 1,000,000 1,000,000 Utah County Municipal Building 5.50% 11/1/2011 - - 1,086,570 1,086,570
Auth. Lease Rev., Prerefunded
at 100% of Par (Ambac)(2)
- - 1,130,000 1,130,000 West Valley City Municipal 5.00% 8/1/2010 - - 1,184,466 1,184,466
Building Auth. Lease Rev.,
Series 2002 A (Ambac)
- - 1,305,000 1,305,000 West Valley City Utility Sales 5.50% 7/15/2016 - - 1,414,046 1,414,046
Tax Rev., Series 2001 A (MBIA) ------------------------------------------------
- - 10,445,905 10,445,905
================================================
VIRGINIA - 0.4%
- - 1,500,000 1,500,000 Fairfax County COP 5.30% 4/15/2023 - - 1,620,300 1,620,300
- - 1,115,000 1,115,000 Pittsylvania County GO, Series 5.75% 3/1/2018 - - 1,228,540 1,228,540
2001 B (MBIA) ------------------------------------------------
- - 2,848,840 2,848,840
================================================
WASHINGTON - 7.6%
- - 1,000,000 1,000,000 Benton County Public Utility 5.625% 11/1/2019 - - 1,087,000 1,087,000
District No. 1 Rev., Series
2001 A (FSA)
- - 5,000,000 5,000,000 City of Tacoma Electric System 5.625% 1/1/2011 - - 5,437,500 5,437,500
Rev., Series 2001 A, Prerefunded
at 101% of Par (FSA)(1)(2)
- - 1,000,000 1,000,000 Cowlitz County Kelso School 5.75% 12/1/2018 - - 1,103,580 1,103,580
District No. 458 GO (FSA)
- - 500,000 500,000 Energy Northwest Rev. (MBIA) 5.00% 7/1/2010 - - 523,595 523,595
- - 1,750,000 1,750,000 Energy Northwest Rev. (MBIA) 4.75% 7/1/2020 - - 1,838,025 1,838,025
- - 3,500,000 3,500,000 Energy Northwest Rev., Series 5.75% 7/1/2018 - - 3,867,360 3,867,360
2002 A, (Columbia Generating)
(MBIA)
- - 10,000,000 10,000,000 Energy Northwest Rev., Series 6.00% 7/1/2018 - - 11,174,800 11,174,800
2002 B, (Columbia Generating)
(Ambac)(1)
- - 1,000,000 1,000,000 Grays Harbor County Public 5.00% 7/1/2023 - - 1,082,730 1,082,730
Utility District No. 1 Rev.
(FGIC)(3)
- - 1,555,000 1,555,000 King County Lake Washington 5.75% 12/1/2015 - - 1,738,941 1,738,941
School District No. 414 GO,
Prerefunded at 100% of Par(2)
- - 1,000,000 1,000,000 King County Public Hospital 5.00% 12/1/2014 - - 1,090,570 1,090,570
District No. 2 GO, (Evergreen
Healthcare) (MBIA)
- - 1,000,000 1,000,000 Kitsap County School District 5.00% 12/1/2017 - - 1,098,060 1,098,060
No. 303 Bainbridge Island GO
(MBIA/School Bond Guarantee)
- - 1,260,000 1,260,000 Mason County Shelton School 5.625% 12/1/2017 - - 1,372,556 1,372,556
District No. 309 GO (FGIC)
- - 1,120,000 1,120,000 Metropolitan Park District of 6.00% 12/1/2011 - - 1,245,574 1,245,574
Tacoma GO, Prerefunded at 100%
of Par (Ambac)(2)
- - 1,000,000 1,000,000 Metropolitan Park District of 6.00% 12/1/2011 - - 1,112,120 1,112,120
Tacoma GO, Prerefunded at 100%
of Par (Ambac)(2)
- - 6,715,000 6,715,000 Snohomish County Edmonds School 5.00% 12/1/2017 - - 7,373,473 7,373,473
District No. 15 GO (FGIC/School
Bond Guarantee)(1)
- - 1,720,000 1,720,000 University of Washington Rev., 5.875% 6/1/2010 - - 1,867,903 1,867,903
(Student Facilities Fee),
Prerefunded at 101% of Par
(FSA)(2)
- - 3,240,000 3,240,000 Washington Economic Development 5.00% 6/1/2023 - - 3,495,377 3,495,377
Finance Auth. Rev., Series 2006
J, (Washington Biomedical
Research Properties II) (MBIA)
- - 1,000,000 1,000,000 Washington GO, Series 1990 A 6.75% 2/1/2015 - - 1,163,900 1,163,900
- - 4,570,000 4,570,000 Washington Public Power Supply 5.00% 7/1/2012 - - 4,752,572 4,752,572
System Rev., Series 1998 A,
(Nuclear Project No. 2) (FSA)(1)
- - 1,500,000 1,500,000 Whitman County Pullman School 5.625% 12/1/2016 - - 1,648,845 1,648,845
District No. 267 GO (FSA)
- - 1,675,000 1,675,000 Yakima County School District No. 5.00% 12/1/2018 - - 1,841,847 1,841,847
208 West Valley GO (MBIA/School ------------------------------------------------
Bond Guaranty) - - 55,916,328 55,916,328
================================================
WISCONSIN - 0.9%
- - 1,990,000 1,990,000 Wisconsin Clean Water Rev. 6.875% 6/1/2011 - - 2,202,990 2,202,990
- - 2,590,000 2,590,000 Wisconsin Health & Educational 6.00% 11/15/2010 - - 2,813,180 2,813,180
Facilities Auth. Rev., (Aurora
Medical Group) (FSA)
- - 500,000 500,000 Wisconsin Health & Educational 5.50% 6/1/2024 - - 539,460 539,460
Facilities Auth. Rev., (Blood
Center Southeastern)
- - 750,000 750,000 Wisconsin Health & Educational 5.75% 6/1/2034 - - 825,720 825,720
Facilities Auth. Rev., (Blood ------------------------------------------------
Center Southeastern) - - 6,381,350 6,381,350
================================================
TOTAL MUNICIPAL SECURITIES 54,328,335 39,832,291 633,731,068 727,891,694
================================================
SHORT-TERM MUNICIPAL SECURITIES - 0.8%
ALASKA - 0.1%
- - 1,000,000 1,000,000 Northern Tobacco Securitization 3.54% 12/7/2006 - - 1,000,000 1,000,000
Corp. Rev., (MT 279), VRDN (LOC: ================================================
Merril Lynch Capital Services)
ARIZONA - 0.2%
- - 650,000 650,000 Phoenix Industrial Development 3.46% 12/7/2006 - - 650,000 650,000
Auth. Rev., Series 2003 A,
(Southwest Human Development),
VRDN
700,000 - 475,000 1,175,000 Pima County Industrial 3.55% 12/6/2006 700,000 - 475,000 1,175,000
Development Auth. Rev., (Tucson ------------------------------------------------
Electric), VRDN (LOC: Bank of 700,000 - 1,125,000 1,825,000
New York) ================================================
FLORIDA - 0.4%
- - 1,500,000 1,500,000 Alachua County Health Facilities 3.65% 12/1/2006 - - 1,500,000 1,500,000
Auth. Rev., Series 2002 A,
(Shands Teaching Hospital and
Clinics Inc. Revolving Loan
Program), VRDN (LOC: SunTrust
Bank)
- - 1,200,000 1,200,000 Sunshine State Governmental 3.75% 12/1/2006 - - 1,200,000 1,200,000
Financing Commission Rev., VRDN ------------------------------------------------
(Ambac) - - 2,700,000 2,700,000
================================================
TENNESSEE - 0.1%
- - 500,000 500,000 Clarksville Public Building 3.65% 12/1/2006 - - 500,000 500,000
Authority Rev., (Tennessee ================================================
Municipal Bond Fund), VRDN (LOC:
Bank of America N.A.)
TOTAL SHORT-TERM MUNICIPAL SECURITIES 700,000 - 5,325,000 6,025,000
================================================
TEMPORARY CASH INVESTMENTS(5)
- 195,000 - 195,000 Federated Florida Municipal - 195,000 - 195,000
Cash Trust ================================================
TOTAL INVESTMENT SECURITIES - 99.6% $55,028,335 $40,027,291 $639,056,068 $734,111,694
================================================
OTHER ASSETS AND LIABILITIES - 0.4% 2,818,215
----------------
TOTAL NET ASSETS - 100.0% $736,929,909
================
FUTURES CONTRACTS
CONTRACTS PURCHASED EXPIRATION UNDERLYING FACE AMOUNT AT VALUE
FUND 1 FUND 2 FUND 3 COMBINED DATE FUND 1 FUND 2 FUND 3 COMBINED
- ----------------------------------------------------------------------------------------------------------------------------------------------------
41 31 484 556 U.S. Treasury 2-Year Notes March 2007 $8,405,000 $6,355,000 $ 99,220,000 $113,980,000
UNREALIZED GAIN (LOSS)
---------------------------------------------------------
$ 17,849 $ 13,495 $ 210,690 $ 242,034
CONTRACTS SOLD EXPIRATION UNDERLYING FACE AMOUNT AT VALUE
FUND 1 FUND 2 FUND 3 COMBINED DATE FUND 1 FUND 2 FUND 3 COMBINED
- ----------------------------------------------------------------------------------------------------------------------------------------------------
32 32 578 642 U.S. Treasury 10-Year Notes March 2007 $3,494,000 $3,494,000 $ 63,110,375 $70,098,375
UNREALIZED GAIN (LOSS)
----------------------------------------------------------
$ (27,321) $ (27,322) $ (493,504) $ (548,147)
NOTES TO SCHEDULE OF INVESTMENTS
ACA = American Capital Access
Ambac = Ambac Assurance Corporation
CIFG = CDC IXIS Financial Guaranty North America
COP = Certificates of Participation
FGIC = Financial Guaranty Insurance Co.
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
FSA = Financial Security Assurance, Inc.
GNMA = Government National Mortgage Association
GO = General Obligation
LOC = Letter of Credit
MBIA = MBIA Insurance Corporation
MBIA-IBC= MBIA Insured Bond Certificates
PSF-GTD= Permanent School Fund - Guaranteed
RADIAN= Radian Asset Assurance, Inc.
VRDN = Variable Rate Demand Note. Interest reset date is indicated.
Rate shown is effective November 30, 2006.
XLCA = XL Capital Ltd.
(1) Security, or a portion thereof, has been segregated for futures
contracts and/or when-issued securities.
(2) Escrowed to maturity in U.S. government securities or state and
local government securities.
(3) When-issued security.
(4) Security is a zero-coupon municipal bond. The rate indicated is
the yield to maturity at purchase. Zero-coupon securities are
issued at a substantial discount from their value at maturity.
(5) Category is less than 0.05% of total net assets.
ARIZONA MUNICIPAL, FLORIDA MUNICIPAL AND TAX-FREE BOND
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2006 (UNAUDITED)
ARIZONA FLORIDA TAX-FREE PRO-FORMA
MUNICIPAL MUNICIPAL BOND ADJUSTMENTS COMBINING (NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------
ASSETS
- ------------------------------------------------------------------------------------------------------------------------
Investment securities, at value $ 55,028,335 $ 40,027,291 $639,056,068 $ - $ 734,111,694
(cost of $52,564,140, $38,144,310 and
$615,259,989, respectively)
Cash 23,858 - 63,168 (17,333)(a) 69,693
Receivable for investments sold - - 844,032 - 844,032
Receivable for capital shares sold - 257 - - 257
Interest receivable 970,474 529,270 9,130,594 - 10,630,338
--------------------------------------------------------------------------------
56,022,667 40,556,818 649,093,862 (17,333) 745,656,014
--------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------
Disbursements in excess of - 17,333 - (17,333)(a) -
demand deposit
Payable for investments purchased - - 7,815,834 - 7,815,834
Payable for variation margin on 4,032 6,220 128,938 139,190
futures contracts
Accrued management fees 22,061 16,132 249,330 - 287,523
Distribution fees payable 354 736 69 - 1,159
Service fees (and distributions 495 473 69 - 1,037
fees - A Class) payable
Dividends payable 40,212 40,591 400,559 481,362
--------------------------------------------------------------------------------
67,154 81,485 8,594,799 $ (17,333) 8,726,105
--------------------------------------------------------------------------------
NET ASSETS $ 55,955,513 $ 40,475,333 $ 640,499,063 $ - $ 736,929,909
================================================================================
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------------
Capital paid in $ 53,710,480 $ 38,969,147 $ 619,367,068 $ - 712,046,695
Accumulated net realized loss on (209,690) (362,968) (2,382,083) (2,954,741)
investment transactions
Net unrealized appreciation on 2,454,723 1,869,154 23,514,078 - 27,837,955
investments --------------------------------------------------------------------------------
$ 55,955,513 $ 40,475,333 $ 640,499,063 $ - $ 736,929,909
================================================================================
PRO-FORMA
ADJUSTMENTS COMBINING
- ------------------------------------------------------------------------------------------------------------------------
Investor Class
- ----------------------------------------
Net Assets $ 53,609,441 $ 38,211,319 $631,397,920 $ 4,947,134 $ 728,165,814
- ----------------------------------------
Shares Outstanding 4,935,858 3,566,628 58,109,259 399,816(b) 67,011,561
- ----------------------------------------
Net asset value per share $ 10.86 $ 10.71 $ 10.87 $ 10.87 $ 10.87
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- ----------------------------------------
Net Assets N/A N/A $ 8,764,095 N/A $ 8,764,095
- ----------------------------------------
Shares Outstanding N/A N/A 806,583 N/A 806,583
- ----------------------------------------
Net asset value per share N/A N/A $ 10.87 N/A $ 10.87
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ----------------------------------------
Net Assets N/A N/A $ 337,048 $ (337,048) N/A
- ----------------------------------------
Shares Outstanding N/A N/A 31,019 (31,019)(b) N/A
- ----------------------------------------
Net asset value per share N/A N/A $ 10.87 $ 10.87 N/A
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
A CLASS
- ----------------------------------------
Net Assets $ 1,769,213 $ 1,065,623 N/A N/A N/A
- ----------------------------------------
Shares Outstanding 162,892 99,465 N/A N/A N/A
- ----------------------------------------
Net asset value per share $ 10.86 $ 10.71 N/A N/A N/A
- ----------------------------------------
Maximum offering price (net asset $ 11.37 $ 11.21 N/A N/A N/A
value divided by 0.955)
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
B CLASS
- ----------------------------------------
Net Assets $ 42,785 $ 16,125 N/A N/A N/A
- ----------------------------------------
Shares Outstanding 3,940 1,505 N/A N/A N/A
- ----------------------------------------
Net asset value per share $ 10.86 $ 10.71 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
C CLASS
- ----------------------------------------
Net Assets $ 534,074 $ 1,182,266 N/A N/A N/A
- ----------------------------------------
Shares Outstanding 49,172 110,352 N/A N/A N/A
- ----------------------------------------
Net asset value per share $ 10.86 $ 10.71 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------
(a) Reclass of disbursements in excess of demand deposit cash against cash to
reflect combined cash position.
(b) Adjustments reflect the issuance of Tax-Free Bond shares in exchange for
all Arizona Municipal shares and Florida Municipal shares in connection
with the proposed reorganization. Also reflects issuance of Investor Class
shares of Tax-Free Bond in exchange for Advisor Class shares of Tax-Free
Bond in connection with the proposed reclassification.
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
ARIZONA MUNICIPAL, FLORIDA MUNICIPAL AND TAX-FREE BOND
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 2006 (UNAUDITED)
ARIZONA FLORIDA TAX-FREE PRO-FORMA
MUNICIPAL MUNICIPAL BOND ADJUSTMENTS COMBINING (NOTE 1)
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------------------------------------------------
INCOME:
Interest $ 2,718,229 $ 1,982,498 $28,040,214 $ - $ 32,740,941
---------------------------------------------------------------------------------------
2,718,229 1,982,498 28,040,214 - 32,740,941
---------------------------------------------------------------------------------------
EXPENSES:
Management fees 274,008 212,603 3,130,894 $ 191 (a) 3,617,696
Distribution Fees:
Advisor Class - - 191 (191) (b) -
B Class 286 137 - (423) (b) -
C Class 3,273 11,401 - (14,674) (b) -
Service Fees:
Advisor Class - - 191 (191) (b) -
B Class 96 45 - (141) (b) -
C Class 1,091 3,799 - (4,890) (b) -
Service and distribution 8,432 3,818 - (12,250) (b) -
fees - A Class
Trustees' fees and expenses 3,047 2,486 37,931 43,464
Other expenses 104 81 1,328 1,513
---------------------------------------------------------------------------------------
290,337 234,370 3,170,535 (32,569) 3,662,673
---------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,427,892 1,748,128 24,869,679 32,569 29,078,268
---------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON:
Investment transactions 5,400 (13,970) (698,015) (706,585)
Futures and swaps transactions (60,651) (16,117) (1,452,381) (1,529,149)
---------------------------------------------------------------------------------------
(55,251) (30,087) (2,150,396) - (2,235,734)
---------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON:
Investment 1,006,878 249,824 9,464,186 10,720,888
Futures and swaps (10,094) 18,264 (301,253) (293,083)
---------------------------------------------------------------------------------------
996,784 268,088 9,162,933 - 10,427,805
---------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED 941,533 238,001 7,012,537 - 8,192,071
GAIN (LOSS) ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 3,369,425 $ 1,986,129 $31,882,216 $ 32,569 $37,270,339
=======================================================================================
(a) Adjustment reflects the increase in total management fees due to the
exchange of Tax-Free Bond's Advisor Class for Investor Class shares.
(b) Adjustment reflects the elimination of 12b-1 fees as a result of these
share classes being exchanged for Tax-Free Bond Investor Class shares.
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
NOVEMBER 30, 2006 (UNAUDITED)
1. BASIS OF COMBINATION-The unaudited Pro Forma Combining Schedule of
Investments, Pro Forma Combining Statement of Assets and Liabilities and
Pro Forma Combining Statement of Operations reflect the accounts of the
Arizona Municipal Bond Fund ("Arizona Municipal"), Florida Municipal Bond
Fund ("Florida Municipal") and Tax-Free Bond Fund ("Tax-Free Bond")
(collectively, the funds), three funds in a series issued by American
Century Municipal Trust at and for the year ended November 30, 2006. The
Pro Forma Combining Schedule of Investments and Pro Forma Combining
Statement of Assets and Liabilities assume the combination was consummated
after the close of business November 30, 2006. The Pro Forma Combining
Statement of Operations assumes the combination was consummated at the
beginning of the fiscal year ended November 30, 2006.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the non-surviving funds, Arizona Municipal and
Florida Municipal, in exchange for shares of the surviving fund, for
purposes of maintaining the financial statements and performance, Tax-Free
Bond. Financial information for Tax-Free Bond as of November 30, 2006, has
been adjusted to reflect the plan of reorganization anticipated to be
effective at the close of business on August 31, 2007, for Arizona
Municipal, Florida Municipal and Tax-Free Bond. Tax-Free Bond will acquire
all of the assets of Arizona Municipal and Florida Municipal in exchange
for shares of equal value of Tax-Free Bond and the assumption of all
liabilities of Arizona Municipal and Florida Municipal. Also, Investor
Class shares of Tax-Free Bond will be issued in exchange for Advisor Class
shares of Tax-Free Bond in connection with the proposed reclassification.
In accordance with accounting principles generally accepted in the United
States of America, the historical cost of investment securities will be
carried forward to the surviving fund and the results of operations for
pre-combination periods for the surviving fund will not be adjusted. Under
the terms of the Agreement and Plan of Reorganization, neither Arizona
Municipal, Florida Municipal nor Tax-Free Bond will bear any of the
expenses associated with the costs of the Reorganization, including proxy
solicitation and tabulation costs. Therefore, the pro forma financial
statements do not reflect these expenses. Under the terms of the Plan of
Reorganization, the combination of the funds will be treated as a tax-free
business combination and accordingly will be accounted for by a method of
accounting for tax-free mergers of investment companies.
The Pro Forma Combining Schedule of Investments, Statement of Assets and
Liabilities and Statement of Operations should be read in conjunction with
the historical financial statements of the funds included or incorporated
by reference in the Statement of Additional Information.
2. SECURITY VALUATION - Debt securities maturing in greater than 60 days are
valued at current market value as provided by a commercial pricing service
or at the mean of the most recent bid and asked prices. Debt securities
maturing within 60 days may be valued at cost, plus or minus any amortized
discount or premium. If an event occurs after the value of a security was
established but before the net asset value per share was determined that
was likely to materially change the net asset value, that security would be
valued at fair value as determined in accordance with procedures adopted by
the Board of Trustees. If the funds determine that the market price of a
portfolio security is not readily available, or that the valuation methods
mentioned above do not reflect the security's fair value, such security is
valued at its fair value as determined by, or in accordance with procedures
adopted by, the Board of Trustees or its designee if such fair value
determination would materially impact a fund's net asset value. Certain
other circumstances may cause the funds to fair value a security such as: a
security has been declared in default; trading in a security has been
halted during the trading day; or there is a foreign market holiday and no
trading will commence.
3. MANAGEMENT FEES - The combined fund will pay a single, unified management
fee per class. This fee provides that all expenses of the fund except
brokerage commissions, taxes, interest, fees and expenses of those trustees
who are not considered "interested persons" as defined in the 1940 Act
(including counsel fees) and extraordinary expenses will be paid by the
Advisor. The adjustments in the Statement of Operations reflect the impact
of the single, unified management fee per class.
4. USE OF ESTIMATES - The pro forma financial statements are prepared in
conformity with accounting principles generally accepted in the United
States of America, which may require management to make certain estimates
and assumptions at the date of the financial statements. Actual results
could differ from those estimates.
5. CAPITAL SHARES -The pro forma net asset value per share assumes the
issuance of shares of the surviving fund that would have been issued at
November 30, 2006, in connection with the proposed reorganization. The
number of shares assumed to be issued is equal to the net asset value of
shares of the non-surviving funds, as of November 30, 2006, divided by the
net asset value per share of the shares of the surviving fund as of
November 30, 2006. The pro forma total number of shares outstanding for the
combined fund consists of the following at November 30, 2006:
- ------------------ ------------------ ------------------- -------------------
COMBINED FUND: TOTAL PRO FORMA SHARES OF SURVIVING ADDITIONAL SHARES
TAX-FREE BOND OUTSTANDING FUND PRIOR ASSUMED ISSUED IN
SHARES TO COMBINATION REORGANIZATION
- ------------------ ------------------ ------------------- -------------------
Investor 67,011,561 58,109,259 8,902,302
- ------------------ ------------------ ------------------- -------------------
Institutional 806,583 806,583 0
- ------------------ ------------------ ------------------- -------------------
Advisor(1) 0 31,019 (31,019)
- ------------------ ------------------ ------------------- -------------------
Total Fund 67,818,144 58,946,861 8,871,283
- ------------------ ------------------ ------------------- -------------------
(1) Tax-Free Bond Advisor Class shares were exchanged for shares of the
Investor Class.
6. FEDERAL TAX INFORMATION - At May 31, 2006, Florida Municipal had
accumulated capital losses of $295,636, which may be used to offset future
realized capital gains for federal income tax purposes. To the extent that
those carryover losses are used to offset capital gains, it is probable
that any gains so offset will not be distributed. The capital loss
carryovers expire in 2013.
For the seven-month period ended May 31, 2006, Arizona Municipal, Florida
Municipal and Tax-Free Bond incurred net capital losses of $154,439,
$81,454, and $659,404, respectively. The funds have elected to treat such
losses as having been incurred in the following fiscal year for federal
income tax purposes.
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.
PART C OTHER INFORMATION
Item 15. Indemnification
The Registrant is a Maryland corporation. Under Maryland General
Corporation Law, a corporation is permitted to indemnify its officers,
directors, employees and agents to the extent provided in applicable statutes.
Article Ninth of Registrant's Articles of Incorporation requires the
indemnification of the Registrant's directors and officers to the full extent
permitted by Maryland General Corporation Law, the Investment Company Act of
1940 and all other applicable laws.
The Registrant has purchased an insurance policy insuring its officers and
directors against certain liabilities which such officers and directors may
incur while acting in such capacities and providing reimbursement to the
Registrant for sums which it may be permitted or required to pay to its officers
and directors by way of indemnification against such liabilities, subject in
either case to clauses respecting deductibility and participation.
Item 16. Exhibits
(1) (a) Articles of Incorporation of American Century Quantitative Equity
Funds, Inc., dated February 26, 2004 (filed electronically as Exhibit a to
Post-Effective Amendment No. 34 to the Registration Statement of the Registrant
on March 1, 2004, File No. 33-19589, and incorporated herein by reference).
(b) Articles Supplementary of American Century Quantitative Equity
Funds, Inc., dated April 22, 2004 (filed electronically as Exhibit a2 to
Post-Effective Amendment No. 35 to the Registration Statement of the Registrant
on April 29, 2004, File No. 33-19589, and incorporated herein by reference).
(c) Articles Supplementary of American Century Quantitative Equity
Funds, Inc., dated May 4, 2004 (filed electronically as Exhibit a3 to
Post-Effective Amendment No. 38 to the Registration Statement of the Registrant
on February 17, 2005, File No. 33-19589, and incorporated herein by reference).
(d) Articles Supplementary of American Century Quantitative Equity
Funds, Inc., dated August 29, 2005 (filed electronically as Exhibit a4 to
Post-Effective Amendment No. 41 to the Registration Statement of the Registrant
on September 29, 2005, File No. 33-19589, and incorporated herein by reference).
(e) Articles Supplementary of American Century Quantitative Equity
Funds, Inc., dated March 15, 2006 (filed electronically as Exhibit a5 to
Post-Effective Amendment No. 44 to the Registration Statement of the Registrant
on April 28, 2006, File No. 33-19589, and incorporated herein by reference).
(f) Articles Supplementary of American Century Quantitative Equity
Funds, Inc., dated August 25, 2006 (filed electronically as Exhibit a6 to
Post-Effective Amendment No. 45 to the Registration Statement of the Registrant
on September 1, 2006, File No. 33-19589, and incorporated herein by reference).
(g) Certificate of Correction of American Century Quantitative Equity
Funds, Inc., dated October 19, 2006 (filed electronically as Exhibit a7 to
Post-Effective Amendment No. 46 to the Registration Statement of the Registrant
on November 29, 2006, File No. 33-19589, and incorporated herein by reference).
(h) Certificate of Correction of American Century Quantitative Equity
Funds, Inc., dated November 10, 2006 (filed electronically as Exhibit 1h to the
Registration Statement on Form N-14 of the Registrant on February 27, 2007, File
No. 333-140913, and incorporated herein by reference).
(2) Amended and Restated Bylaws, dated August 26, 2004 (filed
electronically as Exhibit b to Post-Effective Amendment No. 38 to the
Registration Statement of the Registrant on February 17, 2005, File No.
33-19589, and incorporated herein by reference).
(3) Not applicable.
(4) Not applicable.
(5) Registrant hereby incorporates by reference, as though set forth fully
herein, the Fifth and Seventh declarations of the Registrant's Articles of
Incorporation, incorporated herein by reference as Exhibit 1 hereto, and
Sections 3 through 11 of the Registrant's Bylaws, incorporated herein by
reference as Exhibit 2 hereto.
(6) (a) Management Agreement with American Century Investment Management,
Inc., dated August 1, 2006 (filed electronically as Exhibit d1 to Post-Effective
Amendment No. 45 to the Registration Statement of the Registrant on September 1,
2006, File No. 33-19589, and incorporated herein by reference).
(b) Management Agreement with American Century Investment Management,
Inc., dated April 28, 2006 (filed electronically as Exhibit d2 to Post-Effective
Amendment No. 44 to the Registration Statement of the Registrant on April 28,
2006, File No. 33-19589, and incorporated herein by reference).
(c) Management Agreement with American Century Investment Management,
Inc., dated November 29, 2006 (filed electronically as Exhibit d3 to
Post-Effective Amendment No. 46 to the Registration Statement of the Registrant
on November 29, 2006, File No. 33-19589, and incorporated herein by reference).
(7) (a) Amended and Restated Distribution Agreement with American Century
Investment Services, Inc., dated November 29, 2006 (filed electronically as
Exhibit e1 to Post-Effective Amendment No. 46 to the Registration Statement of
the Registrant on November 29, 2006, File No. 33-19589, and incorporated herein
by reference).
(b) Form of Dealer/Agency Agreement (filed electronically as Exhibit
e2 to Pre-Effective Amendment No. 1 to the Registration Statement of American
Century Growth Funds, Inc. on May 30, 2006, File No. 333-132114, and
incorporated herein by reference).
(8) Not applicable.
(9) (a) Master Agreement with Commerce Bank, N. A., dated January 22, 1997
(filed electronically as Exhibit b8e to Post-Effective Amendment No. 76 to the
Registration Statement of American Century Mutual Funds, Inc. on February 28,
1997, File No. 2-14213, and incorporated herein by reference).
(b) Global Custody Agreement with The Chase Manhattan Bank, dated
August 9, 1996 (filed electronically as Exhibit b8 to Post-Effective Amendment
No. 31 to the Registration Statement of American Century Government Income Trust
on February 7, 1997, File No. 2-99222, and incorporated herein by reference).
(c) Amendment to the Global Custody Agreement with The Chase Manhattan
Bank, dated December 9, 2000 (filed electronically as Exhibit g2 to
Pre-Effective Amendment No. 2 to the Registration Statement of American Century
Variable Portfolios II, Inc. on January 9, 2001, File No. 333-46922, and
incorporated herein by reference).
(d) Amendment No. 2 to the Global Custody Agreement between American
Century Investments and the JPMorgan Chase Bank, dated as of May 1, 2004 (filed
electronically as Exhibit g4 to Post-Effective Amendment No. 35 to the
Registration Statement of the Registrant on April 29, 2004, File No. 33-19589,
and incorporated herein by reference).
(e) Chase Manhattan Bank Custody Fee Schedule, dated October 19, 2000
(filed electronically as Exhibit g5 to Post-Effective Amendment No. 35 to the
Registration Statement of the Registrant on April 29, 2004, File No. 33-19589,
and incorporated herein by reference).
(f) Amendment No. 3 to the Global Custody Agreement between American
Century Investments and the JPMorgan Chase Bank, dated as of May 31, 2006 (filed
electronically as Exhibit g6 to Pre-Effective Amendment No. 1 to the
Registration Statement of American Century Growth Funds, Inc. on May 30, 2006,
File No. 333-132114, and incorporated herein by reference).
(g) Special Custody and Pledge Agreement with Goldman, Sachs & Co. and
State Street Bank and Trust Company, dated September 29, 2005 (filed
electronically as Exhibit g6 to Post-Effective Amendment No. 41 to the
Registration Statement of the Registrant on September 29, 2005, File No.
33-19589, and incorporated herein by reference).
(h) Custodian and Investment Accounting Agreement with State Street
Bank and Trust Company, dated May 27, 2005 (filed electronically as Exhibit g6
to Post-Effective Amendment No. 27 to the Registration Statement of American
Century Investment Trust on May 27, 2005, File No. 33-65170, and incorporated
herein by reference).
(i) Amendment No. 1 to Custodian and Investment Accounting Agreement
with State Street Bank and Trust Company, effective September 30, 2005 (filed
electronically as Exhibit g8 to Post-Effective Amendment No. 41 to the
Registration Statement of the Registrant on September 29, 2005, File No.
33-19589, and incorporated herein by reference).
(j) Amendment No. 2 to Custodian and Investment Accounting Agreement
with State Street Bank and Trust Company, effective March 31, 2006 (filed
electronically as Exhibit g9 to Post-Effective Amendment No. 32 to the
Registration Statement of American Century Investment Trust on March 31, 2006,
File No. 33-65170, and incorporated herein by reference).
(k) Registered Investment Company Custody Agreement with Goldman,
Sachs & Co., dated February 6, 2006 (filed electronically as Exhibit g10 to
Post-Effective Amendment No. 44 to the Registration Statement of the Registrant
on April 28, 2006, File No. 33-19589, and incorporated herein by reference).
(l) Amendment to Futures and Options Account Agreement and Registered
Investment Company Custody Agreement with Goldman, Sachs & Co., effective May
12, 2006 (filed electronically as Exhibit g11 to Post-Effective Amendment No. 44
to the Registration Statement of the Registrant on April 28, 2006, File No.
33-19589, and incorporated herein by reference).
(m) Amendment to Futures and Options Account Agreement and Registered
Investment Company Custody Agreement with Goldman, Sachs & Co., effective
November 30, 2006 (filed electronically as Exhibit g13 to Post-Effective
Amendment No. 46 to the Registration Statement of the Registrant on November 29,
2006, File No. 33-19589, and incorporated herein by reference).
(10) (a) Master Distribution and Individual Shareholder Services Plan (C
Class), dated September 16, 2000 (filed electronically as Exhibit m3 to
Post-Effective Amendment No. 35 to the Registration Statement of American
Century Target Maturities Trust on April 17, 2001, File No. 2-94608, and
incorporated herein by reference).
(b) Amendment No. 1 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated August 1, 2001 (filed electronically
as Exhibit m5 to Post-Effective Amendment No. 44 to the Registration Statement
of American Century Government Income Trust on July 31, 2001, File No. 2-99222,
and incorporated herein by reference).
(c) Amendment No. 2 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated December 3, 2001 (filed
electronically as Exhibit m7 to Post-Effective Amendment No. 16 to the
Registration Statement of American Century Investment Trust on November 30,
2001, File No. 33-65170, and incorporated herein by reference).
(d) Amendment No. 3 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated July 1, 2002 (filed electronically as
Exhibit m9 to Post-Effective Amendment No. 17 to the Registration Statement of
American Century Investment Trust on June 28, 2002, File No. 33-65170, and
incorporated herein by reference).
(e) Amendment No. 4 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated September 3, 2002 (filed
electronically as Exhibit m5 to Post-Effective Amendment No. 35 to the
Registration Statement of American Century Municipal Trust on September 30,
2002, File No. 2-91229, and incorporated herein by reference).
(f) Amendment No. 5 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated January 2, 2004, (filed
electronically as Exhibit m6 to Post-Effective Amendment No. 42 to the
Registration Statement of American Century Municipal Trust on February 26, 2004,
File No. 2-91229, and incorporated herein by reference).
(g) Amendment No. 6 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated May 1, 2004 (filed electronically as
Exhibit m13 to Post-Effective Amendment No. 35 to the Registration Statement of
the Registrant on April 29, 2004, File No. 33-19589, and incorporated herein by
reference).
(h) Amendment No. 7 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated May 1, 2005 (filed electronically as
Exhibit m15 to Post-Effective Amendment No. 38 to the Registration Statement of
the Registrant on May 13, 2005, File No. 33-19589, and incorporated herein by
reference).
(i) Amendment No. 8 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated September 29, 2005 (filed
electronically as Exhibit m17 to Post-Effective Amendment No. 41 to the
Registration Statement of the Registrant on September 29, 2005, File No.
33-19589, and incorporated herein by reference).
(j) Amendment No. 9 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated March 30, 2006 (filed electronically
as Exhibit m10 to Post-Effective Amendment No. 50 to the Registration Statement
of American Century Municipal Trust on March 31, 2006, File No. 2-14213, and
incorporated herein by reference).
(k) Amendment No. 10 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated November 29, 2006 (filed
electronically as Exhibit m19 to Post-Effective Amendment No. 46 to the
Registration Statement of the Registrant on November 29, 2006, File No.
33-19589, and incorporated herein by reference).
(l) Master Distribution and Individual Shareholder Services Plan (A
Class), dated September 3, 2002 (filed electronically as Exhibit m6 to
Post-Effective Amendment No. 34 to the Registration Statement of American
Century California Tax-Free and Municipal Funds on October 1, 2002, File No.
2-82734, and incorporated herein by reference).
(m) Amendment No. 1 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated February 27, 2004 (filed
electronically as Exhibit m18 to Post-Effective Amendment No. 104 to the
Registration Statement of American Century Mutual Funds, Inc. on February 26,
2004, File No. 2-14213, and incorporated herein by reference).
(n) Amendment No. 2 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated September 30, 2004 (filed
electronically as Exhibit m22 to Post-Effective Amendment No. 106 to the
Registration Statement of American Century Mutual Funds, Inc. on November 29,
2004, File No. 2-14213, and incorporated herein by reference).
(o) Amendment No. 3 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated November 17, 2004 (filed
electronically as Exhibit m23 to Post-Effective Amendment No. 106 to the
Registration Statement of American Century Mutual Funds, Inc. on November 29,
2004, File No. 2-14213, and incorporated herein by reference).
(p) Amendment No. 4 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated May 1, 2005 (filed electronically as
Exhibit m13 to Post-Effective Amendment No. 44 to the Registration Statement of
American Century Municipal Trust. on May 13, 2005, File No. 2-91229, and
incorporated herein by reference).
(q) Amendment No. 5 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated September 29, 2005 (filed
electronically as Exhibit m25 to Post-Effective Amendment No. 38 to the
Registration Statement of American Century World Mutual Funds, Inc. on November
30, 2005, File No. 33-39242, and incorporated herein by reference).
(r) Amendment No. 6 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated March 30, 2006 (filed electronically
as Exhibit m27 to Post-Effective Amendment No. 23 to the Registration Statement
of American Century Strategic Asset Allocations, Inc. on March 30, 2006, File
No. 33-79482, and incorporated herein by reference).
(s) Amendment No. 7 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated November 29, 2006 (filed
electronically as Exhibit m34 to Post-Effective Amendment No. 46 to the
Registration Statement of the Registrant on November 26, 2006, File No.
33-19589, and incorporated herein by reference).
(t) Master Distribution and Individual Shareholder Services Plan (B
Class), dated September 3, 2002 (filed electronically as Exhibit m7 to
Post-Effective Amendment No. 34 to the Registration Statement of American
Century California Tax-Free and Municipal Funds on October 1, 2002, File No.
2-82734, and incorporated herein by reference).
(u) Amendment No. 1 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated February 27, 2004 (filed
electronically as Exhibit m20 to Post-Effective Amendment No. 104 to the
Registration Statement of American Century Mutual Funds, Inc. on February 26,
2004, File No. 2-14213, and incorporated herein by reference).
(v) Amendment No. 2 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated September 30, 2004 (filed
electronically as Exhibit m26 to Post-Effective No. 106 to the Registration
Statement of American Century Mutual Funds, Inc. on November 29, 2004, File No.
2-14213, and incorporated herein by reference).
(w) Amendment No. 3 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated November 17, 2004 (filed
electronically as Exhibit m27 to Post-Effective Amendment No. 106 to the
Registration Statement of American Century Mutual Funds, Inc. on November 29,
2004, File No. 2-14213, and incorporated herein by reference).
(x) Amendment No. 4 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated May 1, 2005 (filed electronically as
Exhibit m18 to Post-Effective Amendment No. 44 to the Registration Statement of
Municipal Trust on May 13, 2005, File No. 2-91229, and incorporated herein by
reference).
(y) Amendment No. 5 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated September 29, 2005 (filed
electronically as Exhibit m31 to Post-Effective Amendment No. 38 to the
Registration Statement of American Century World Mutual Funds, Inc. on November
30, 2005, File No. 33-39242, and incorporated herein by reference).
(z) Amendment No. 6 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated March 30, 2006 (filed electronically
as Exhibit m34 to Post-Effective Amendment No. 23 to the Registration Statement
of American Century Strategic Asset Allocations, Inc. on March 30, 2006, File
No. 33-79482, and incorporated herein by reference).
(aa) Amendment No. 7 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated November 29, 2006 (filed
electronically as Exhibit m42 to Post-Effective Amendment No. 46 to the
Registration Statement of the Registrant on November 26, 2006, File No.
33-19589, and incorporated herein by reference).
(bb) Master Distribution and Shareholder Services Plan (Advisor
Class), dated August 1, 1997, (filed electronically as Exhibit m18 to
Post-Effective Amendment No. 32 to the Registration Statement of American
Century Target Maturities Trust on January 31, 2000, File No. 2-94608, and
incorporated herein by reference).
(cc) Amendment to Master Distribution and Shareholder Services Plan
(Advisor Class), dated June 29, 1998 (filed electronically as Exhibit m2 to
Post-Effective Amendment No. 32 to the Registration Statement of American
Century Target Maturities Trust on January 31, 2000, File No. 2-94608, and
incorporated herein by reference).
(dd) Amendment No. 1 to Master Distribution and Shareholder Services
Plan (Advisor Class), dated August 1, 2001 (filed electronically as Exhibit m3
to Post-Effective Amendment No. 44 to the Registration Statement of American
Century Government Income Trust on July 31, 2001, File No. 2-99222, and
incorporated herein by reference).
(ee) Amendment No. 2 to Master Distribution and Shareholder Services
Plan (Advisor Class), dated December 3, 2001 (filed electronically as Exhibit m4
to Post-Effective Amendment No. 16 to the Registration Statement of the American
Century Investment Trust on November 30, 2001, File No. 33-65170, and
incorporated herein by reference).
(ff) Amendment No. 3 to Master Distribution and Shareholder Services
Plan (Advisor Class), dated July 1, 2002 (filed electronically as Exhibit m5 to
Post-Effective Amendment No. 38 to the Registration Statement of American
Century Target Maturities Trust on January 31, 2005, File No. 2-94608, and
incorporated herein by reference).
(gg) Amendment No. 4 to Master Distribution and Shareholder Services
Plan (Advisor Class), dated May 1, 2004 (filed electronically as Exhibit m6 to
Post-Effective Amendment No. 35 to the Registration Statement of the Registrant
on April 29, 2004, File No. 33-19589, and incorporated herein by reference).
(hh) Amendment No. 5 to Master Distribution and Shareholder Services
Plan (Advisor Class), dated July 29, 2005 (filed electronically as Exhibit m7 to
Post-Effective Amendment No. 51 to the Registration Statement of American
Century Government Income Trust on July 28, 2005, File No. 2-99222, and
incorporated herein by reference).
(ii) Amendment No. 6 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated September 29, 2005 (filed electronically as
Exhibit m8 to Post-Effective Amendment No. 41 to the Registration Statement of
the Registrant on September 29, 2005, File No. 33-19589, and incorporated herein
by reference).
(jj) Master Distribution and Individual Shareholder Services Plan (R
Class), dated August 29, 2003 (filed electronically as Exhibit m16 to
Post-Effective Amendment No. 17 to the Registration Statement of American
Century Strategic Asset Allocations, Inc. on August 28, 2003, File No. 33-79482,
and incorporated herein by reference).
(kk) Amendment No. 1 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated May 1, 2004 (filed electronically as
Exhibit m13 to Post-Effective Amendment No. 35 to the Registration Statement of
the Registrant on April 29, 2004, File No. 33-19589, and incorporated herein by
reference).
(ll) Amendment No. 2 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated February 24, 2005 (filed
electronically as Exhibit m30 to Post-Effective Amendment No. 22 to the
Registration Statement of American Century Strategic Asset Allocations, Inc. on
March 30, 2005, File No. 33-79482, and incorporated herein by reference).
(mm) Amendment No. 3 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated July 29, 2005 (filed electronically
as Exhibit m33 to Post-Effective Amendment No. 111 to the Registration Statement
of American Century Mutual Funds, Inc. on July 28, 2005, File No. 2-14213, and
incorporated herein by reference).
(nn) Amendment No. 4 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated September 29, 2005 (filed
electronically as Exhibit m22 to Post-Effective Amendment No. 41 to the
Registration Statement of the Registrant on September 29, 2005, File No.
33-19589, and incorporated herein by reference).
(oo) Amendment No. 5 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated March 30, 2006 (filed electronically
as Exhibit m40 to Post-Effective Amendment No. 23 to the Registration Statement
of American Century Strategic Asset Allocations, Inc. on March 30, 2006, File
No. 33-79482, and incorporated herein by reference).
(pp) Amendment No. 6 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated November 29, 2006 (filed
electronically as Exhibit m26 to Post-Effective Amendment No. 46 to the
Registration Statement of the Registrant on November 29, 2006, File No.
33-19589, and incorporated herein by reference).
(qq) Amended and Restated Multiple Class Plan, dated September 3, 2002
(filed electronically as Exhibit n to Post-Effective Amendment No. 35 to the
Registration Statement of American Century California Tax-Free and Municipal
Funds on December 17, 2002, File No. 2-82734, and incorporated herein by
reference).
(rr) Amendment No. 1 to the Amended and Restated Multiple Class Plan,
dated December 31, 2002 (filed electronically as Exhibit n2 to Post-Effective
Amendment No. 39 to the Registration Statement of American Century Municipal
Trust on December 23, 2002, File No. 2-91229, and incorporated herein by
reference).
(ss) Amendment No. 2 to the Amended and Restated Multiple Class Plan,
dated August 29, 2003 (filed electronically as Exhibit n3 to Post-Effective
Amendment No. 17 to the Registration Statement of American Century Strategic
Asset Allocations, Inc. on August 28, 2003, File No. 33-79482, and incorporated
herein by reference).
(tt) Amendment No. 3 to the Amended and Restated Multiple Class Plan,
dated February 27, 2004 (filed electronically as Exhibit n4 to Post-Effective
Amendment No. 104 to the Registration Statement of American Century Mutual
Funds, Inc. on February 26, 2004, File No. 2-14213, and incorporated herein by
reference).
(uu) Amendment No. 4 to the Amended and Restated Multiple Class Plan,
dated May 1, 2004 (filed electronically as Exhibit n5 to Post-Effective
Amendment No. 35 to the Registration Statement of the Registrant on April 29,
2004, File No. 33-19589, and incorporated herein by reference).
(vv) Amendment No. 5 to the Amended and Restated Multiple Class Plan,
dated August 1, 2004 (filed electronically as Exhibit n6 to Post-Effective
Amendment No. 24 to the Registration Statement of American Century Investment
Trust on August 1, 2004, File No. 33-65170, and incorporated herein by
reference).
(ww) Amendment No. 6 to the Amended and Restated Multiple Class Plan,
dated as of September 30, 2004 (filed electronically as Exhibit n7 to
Post-Effective Amendment No. 20 to the Registration Statement of American
Century Strategic Asset Allocations, Inc. on September 29, 2004, File No.
33-79482, and incorporated herein by reference).
(xx) Amendment No. 7 to the Amended and Restated Multiple Class Plan,
dated November 17, 2004 (filed electronically as Exhibit n8 to Post-Effective
Amendment No. 106 to the Registration Statement of American Century Mutual
Funds, Inc. on November 29, 2004, File No. 2-14213, and incorporated herein by
reference).
(yy) Amendment No. 8 to the Amended and Restated Multiple Class Plan,
dated February 24, 2005 (filed electronically as Exhibit n9 to Post-Effective
Amendment No. 22 to the Registration Statement of American Century Strategic
Asset Allocations, Inc. on March 30, 2005, File No. 33-79482, and incorporated
herein by reference).
(zz) Amendment No. 9 to the Amended and Restated Multiple Class Plan,
dated July 29, 2005 (filed electronically as Exhibit n10 to Post-Effective
Amendment No. 111 to the Registration Statement of American Century Mutual
Funds, Inc. on July 28, 2005, File No. 2-14213, and incorporated herein by
reference).
(aaa) Amendment No. 10 to the Amended and Restated Multiple Class
Plan, dated September 29, 2005 (filed electronically as Exhibit n11 to
Post-Effective Amendment No. 41 to the Registration Statement of the Registrant
on September 29, 2005, File No. 33-19589, and incorporated herein by reference).
(bbb) Amendment No. 11 to the Amended and Restated Multiple Class
Plan, dated March 30, 2006 (filed electronically as Exhibit n12 to
Post-Effective Amendment No. 23 to the Registration Statement of American
Century Strategic Asset Allocations, Inc. on March 30, 2006, File No. 33-79482,
and incorporated herein by reference).
(ccc) Amendment No. 12 to the Amended and Restated Multiple Class
Plan, dated November 29, 2006 (filed electronically as Exhibit n13 to
Post-Effective Amendment No. 46 to the Registration Statement of the Registrant
on November 29, 2006, File No. 33-19589, and incorporated herein by reference)
(11) Opinion and Consent of Counsel, dated February 27, 2007 (filed
electronically as Exhibit 11 to the Registration Statement on Form N-14 of the
Registrant on February 27, 2007, File No. 333-140913, and incorporated herein by
reference). herein.
(12) Not applicable.
(13) (a) Transfer Agency Agreement with American Century Services
Corporation, dated August 1, 1997 (filed electronically as Exhibit 9 to
Post-Effective Amendment No. 33 to the Registration Statement of American
Century Government Income Trust on July 31, 1997, File No. 2-99222, and
incorporated herein by reference).
(b) Amendment No. 1 to the Transfer Agency Agreement American Century
Services Corporation, dated June 29, 1998 (filed electronically as Exhibit 9b to
Post-Effective Amendment No. 23 to the Registration Statement of American
Century Quantitative Equity Funds on June 29, 1998, File No. 33-19589, and
incorporated herein by reference).
(c) Amendment No. 2 to the Transfer Agency Agreement with American
Century Services Corporation, dated November 20, 2000 (filed electronically as
Exhibit h4 to Post-Effective Amendment No. 30 to the Registration Statement of
American Century California Tax-Free and Municipal Funds on December 29, 2000,
File No. 2-82734, and incorporated herein by reference).
(d) Amendment No. 3 to the Transfer Agency Agreement with American
Century Services Corporation, dated August 1, 2001 (filed electronically as
Exhibit h5 to Post-Effective Amendment No. 44 to the Registration Statement of
American Century Government Income Trust on July 31, 2001, File No. 2-99222, and
incorporated herein by reference).
(e) Amendment No. 4 to the Transfer Agency Agreement with American
Century Services Corporation, dated December 3, 2001 (filed electronically as
Exhibit h6 to Post-Effective Amendment No. 16 to the Registration Statement of
American Century Investment Trust on November 30, 2001, File No. 33-65170, and
incorporated herein by reference).
(f) Amendment No. 5 to the Transfer Agency Agreement with American
Century Services Corporation, dated July 1, 2002 (filed electronically as
Exhibit h6 to Post-Effective Amendment No. 17 to the Registration Statement of
American Century Investment Trust on June 28, 2002, File No. 33-65170, and
incorporated herein by reference).
(g) Amendment No. 6 to the Transfer Agency Agreement with American
Century Services Corporation, dated September 3, 2002 (filed electronically as
Exhibit h7 to Post-Effective Amendment No. 35 to the Registration Statement of
the Registrant on September 30, 2002, File No. 2-91229, and incorporated herein
by reference).
(h) Amendment No. 7 to the Transfer Agency Agreement with American
Century Services Corporation, dated December 31, 2002 (filed electronically as
Exhibit h8 to Post-Effective Amendment No. 4 to the Registration Statement of
American Century Variable Portfolios II, Inc. on December 23, 2002, File No.
333-46922, and incorporated herein by reference).
(i) Amendment No. 8 to the Transfer Agency Agreement with American
Century Services Corporation, dated May 1, 2004 (filed electronically as Exhibit
h10 to Post-Effective Amendment No. 35 to the Registration Statement of American
Century Quantitative Equity Funds, Inc. on April 29, 2004, File No. 33-19589,
and incorporated herein by reference).
(j) Amendment No. 9 to the Transfer Agency Agreement with American
Century Services, LLC, dated May 1, 2005 (filed electronically as Exhibit h9 to
Post-Effective Amendment No. 38 to the Registration Statement of American
Century Quantitative Equity Funds, Inc. on May 13, 2005, File No. 33-19589, and
incorporated herein by reference).
(k) Amendment No. 10 to the Transfer Agency Agreement with American
Century Services, LLC, dated September 29, 2005 (filed electronically as Exhibit
h11 to Post-Effective Amendment No. 41 to the Registration Statement of American
Century Quantitative Equity Funds, Inc. on September 29, 2005, File No.
33-19589, and incorporated herein by reference).
(l) Amendment No. 11 to the Transfer Agency Agreement with American
Century Services, LLC, dated March 30, 2006 (filed electronically as Exhibit h12
to Post-Effective Amendment No. 50 to the Registration Statement of American
Century Municipal Trust on March 31, 2006, File No. 2-14213, and incorporated
herein by reference).
(m) Amendment No. 12 to the Transfer Agency Agreement with American
Century Services, LLC, dated April 28, 2006 (filed electronically as Exhibit h13
to Post-Effective Amendment No. 44 to the Registration Statement of the
Registrant on April 28, 2006, File No. 33-19589, and incorporated herein by
reference).
(n) Amendment No. 13 to the Transfer Agency Agreement with American
Century Services, LLC, dated November 29, 2006 (filed electronically as Exhibit
h14 to Post-Effective Amendment No. 46 to the Registration Statement of the
Registrant on November 29, 2006, File No. 33-19589, and incorporated herein by
reference).
(o) Credit Agreement with JPMorgan Chase Bank, as Administrative
Agent, dated December 17, 2003 (filed electronically as Exhibit h9 to
Post-Effective Amendment No. 39 to the Registration Statement of American
Century Target Maturities Trust on January 30, 2004, File No. 2-94608, and
incorporated herein by reference).
(p) Termination, Replacement and Restatement Agreement with JPMorgan
Chase Bank N.A., as Administrative Agent, dated December 13, 2006 (filed
electronically as Exhibit h13 to Post-Effective Amendment No. 41 to the
Registration Statement of American Century California Tax-Free and Municipal
Funds on December 28, 2006, File No. 2-82734, and incorporated herein by
reference).
(q) Customer Identification Program Reliance Agreement (filed
electronically as Exhibit h2 to Pre-Effective Amendment No. 1 to the
Registration Statement of American Century Growth Funds, Inc. on May 30, 2006,
File No. 333-116351, and incorporated herein by reference).
(r) New Account Agreement with Goldman, Sachs & Co. (filed
electronically as Exhibit h15 to Post-Effective Amendment No. 41 to the
Registration Statement of the Registrant on September 29, 2005, File No.
33-19589, and incorporated herein by reference).
(s) Prime Brokerage Supplement with Goldman, Sachs & Co. (filed
electronically as Exhibit h16 to Post-Effective Amendment No. 41 to the
Registration Statement of the Registrant on September 29, 2005, File No.
33-19589, and incorporated herein by reference).
(t) Amendment No. 1 to Prime Brokerage Agreement, dated as of
September 29, 2005, by and between Goldman, Sachs & Co. and Long/Short Equity
Fund, a series of American Century Quantitative Equity Funds, Inc. (filed
electronically as Exhibit h17 to Post-Effective Amendment No. 41 to the
Registration Statement of the Registrant on September 29, 2005, File No.
33-19589, and incorporated herein by reference).
(14) Consent of PricewaterhouseCoopers LLP, independent registered public
accounting firm, dated March 29, 2007, is included herein.
(15) Not applicable.
(16) (a) Power of Attorney, dated March 8, 2007, is included herein.
(b) Secretary's Certificate, dated March 13, 2007, is included herein.
(17) Form of proxy card is included herein.
Item 17. Undertakings
Not applicable.
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of Kansas
City, State of Missouri on the 30th day of March, 2007.
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.
(Registrant)
By: *
-----------------------------------------
Jonathan S. Thomas
President
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
* President March 30, 2007
- ------------------------
Jonathan S. Thomas
* Vice President, March 30, 2007
- ------------------------ Treasurer and Chief
Robert J. Leach Financial Officer
* Director March 30, 2007
- ------------------------
John Freidenrich
* Chairman of the March 30, 2007
- ------------------------ Board and Director
Ronald J. Gilson
* Director March 30, 2007
- ------------------------
Kathryn A. Hall
* Director March 30, 2007
- ------------------------
Myron S. Scholes
* Director March 30, 2007
- ------------------------
John B. Shoven
* Director March 30, 2007
- ------------------------
Jeanne D. Wohlers
*By: /s/ Brian L. Brogan
----------------------------------------
Brian L. Brogan
Attorney in Fact
(pursuant to Power of Attorney
dated March 8, 2007)
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT
NUMBER
EXHIBIT (14) Consent of PricewaterhouseCoopers LLP, independent
registered public accounting firm, dated March 29, 2007.
EXHIBIT (16)(a) Power of Attorney, dated March 8, 2007.
EXHIBIT (16)(b) Secretary's Certificate, dated March 13, 2007.
EXHIBIT (17) Form of proxy card.
